We Can Interpret a Correlation Coefficient in Terms of the "Percent

question 1

Multiple Choice

We can interpret a correlation coefficient in terms of the "percent of variance accounted for." Using this method, the correlation r = .60 accounts for what percent of variance?

• A) .06
• B) .36
• C) .40
• D) .60

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Definitions:

Stable Market Value

Refers to assets or securities that demonstrate low volatility and maintain their value over time in various market conditions.

Floating-Rate

An interest rate that fluctuates over time with the market or an index, commonly used in variable-rate loans and adjustable-rate mortgages.

Interest Rates

The percentage charged on borrowed money, or earned through lending money or making investments, over a specified period.

Income Bond

An income bond is a type of bond that only pays interest if the issuing company is profitable, making it a riskier investment than bonds with guaranteed interest payments.