If One Calculates a Correlation of -1

question 1

Multiple Choice

If one calculates a correlation of -1.20,this coefficient indicates that a

• A) perfect negative relationship exists.
• B) moderately strong relationship exists.
• C) weak correlation exists.
• D) miscalculation has occurred.

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Definitions:

Partial Equity Method

An accounting approach used when a company holds a significant influence, but not control, over an investee, recognizing a portion of the investee's income proportional to ownership stake.

Equipment Account

An account on the balance sheet representing the cost of equipment a company owns.

Goodwill Impairment

An accounting charge that occurs when the book value of goodwill exceeds its fair market value, indicating the assets are worth less than their currently recorded value.

Fair Value

An estimation of the market value of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable, willing parties.