When Two Variables,X and Y,are Correlated,three Possible Reasons for Their

question 45

True/False

When two variables,X and Y,are correlated,three possible reasons for their correlation are that (1)X might cause Y, (2)Y might cause X,or (3)some additional variable(s)might cause both X and Y.

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Definitions:

Yield To Maturity

the total return anticipated on a bond if the bond is held until it matures, considering both interest payments and capital gain.

10 ½% Bond

A bond that pays an annual interest rate of ten and a half percent of its face value.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date.

8 ½% Bond

A bond that pays an annual interest rate of 8.5% on its face value.