When Using Correlation,we CANNOT

question 187

Multiple Choice

When using correlation,we CANNOT

• A) determine the direction of the relationship.
• B) conclude that a cause-and-effect relationship exists.
• C) use it to make a prediction.
• D) determine the strength of the relationship.

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Definitions:

Consecutive Years

A period of time consisting of sequential years immediately following one another without interruption.

Predicting

The action or process of making forecasts about future events or outcomes based on current or historical data.

Weak Form

The hypothesis that past stock prices and trading volume do not affect future stock prices, suggesting that technical analysis cannot predict future movements.

Efficient-Market Hypothesis

The theory that all available information is already reflected in stock prices, suggesting that it is impossible to consistently achieve higher returns than the overall market through expert stock selection or market timing.