Which of the Following Correlation Coefficients Indicates the Strongest Relationship

question 55

Multiple Choice

Which of the following correlation coefficients indicates the strongest relationship between two variables? That is, which one would enable us to make the most accurate predictions of one variable from the other?

• A) 0
• B) +.5
• C) -.9
• D) -.5

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Definitions:

Replacement Decision

The evaluation process for determining whether to repair, maintain or replace an asset or piece of equipment.

Volume Of Operations

The scale or magnitude of the business activities that a company carries out in a specific period.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not be considered in new decision making.

Financing Costs

Expenses incurred by a company to finance its operations or to raise capital, such as interest payments on loans.