The Appropriate Correlation Coefficient for Measuring the Direction and Strength

question 12

Multiple Choice

The appropriate correlation coefficient for measuring the direction and strength of the linear relationship between one continuous and one dichotomous variable is ______.

• A) the Spearman rank-order correlation coefficient
• B) the point-biserial correlation coefficient
• C) the phi correlation coefficient
• D) none of these

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Definitions:

Net Operating Income

Income from operations after deducting operating expenses but before interest and taxes.

Operating Assets

Assets utilized in the daily operations of a business to generate revenue, such as equipment, machinery, and buildings.

Minimum Required Rate of Return

The lowest acceptable return on an investment, determined by the investor's objectives, risks, and opportunities.

Division's Margin

The difference between the sales generated by a division and its direct costs, used to evaluate the profitability of the division.