What Does the Covariance Measure

question 104

Multiple Choice

What does the covariance measure?

• A) The direction of a linear relationship between two variables.
• B) The direction of a curvilinear relationship between two variables.
• C) The direction of a linear relationship between two or more variables.
• D) The direction of a curvilinear relationship between two or more variables.

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Definitions:

Residual Income

The income that remains after deducting all operation and investment costs, including a minimum desired return on investment.

Required Rate of Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular project or investment.

Return on Investment

A measure used to evaluate the efficiency of an investment, calculated as the return (profit) of an investment divided by the cost of the investment.

Division

A section or branch of a company that operates semi-autonomously, focusing on a particular product line, market segment, or geographical area.