The Correlation Between a and B Is

question 214

Multiple Choice

The correlation between A and B is +.60; the correlation between C and D is -.75. What do we know about causation based on the above?

• A) We know A causes B, but we don't know if C causes D.
• B) We know C causes D, but we don't know if A causes B.
• C) We know A causes B AND that D causes C.
• D) We don't know anything about causation from the information above.

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Definitions:

Lower-of-cost-or-market

An accounting principle that requires inventory to be recorded at the lower of its original cost or current market value, ensuring assets are not overstated on the balance sheet.

Balance Sheet

A documentation of a company’s financial position, showcasing assets, liabilities, and the equity held by shareholders at a particular instance.

Lower-of-cost-or-market

An accounting principle that valuables inventory at the lower cost between the original purchase cost and its current market price.

Conservatism

An accounting principle that requires uncertainties and risks to be accounted for by reporting lower potential profits and higher liabilities.