If There Is a

question 82

Multiple Choice

If there is a .75 correlation between the hours that students devote to studying and their grades,

• A) a third variable, such as motivation and interest may account for the relationship.
• B) we can conclusively say that this strong correlation indicates a causal relationship.
• C) there is a weak, almost non-existent relationship.
• D) there is a strong negative correlation.

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Definitions:

Discretionary Accounting

The practice of using judgment in financial reporting and making decisions on accounting policies where alternatives exist.

Covenant Violations

Occurrences when a borrower fails to meet the terms of a loan agreement, potentially leading to penalties or loan default.

Current Ratio

A financial metric that evaluates a firm's capacity to settle debts due within a year by comparing its current assets to its current liabilities.

Accounting-Based Covenants

Agreements or clauses within contracts that require a borrower to meet certain financial metrics or conditions, based on accounting figures.