A High Correlation Between a Child's Behaviour (E

question 39

Multiple Choice

A high correlation between a child's behaviour (e.g., being aggressive) and that of her parents (e.g., spanking) indicates that

• A)the child's aggression caused the spanking.
• B)the spanking caused the aggression.
• C)shared aggressive genes, a third factor, caused the child's aggression and the parents' spanking.
• D)aggression and spanking are related, but correlations do not indicate causality.

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Definitions:

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new plant, worthwhile, including the cost of debt and equity financing.

Required Return

The minimum expected rate of return on an investment deemed acceptable to an investor, taking into account the risk level of the investment.

Payback Period

The length of time it takes for an investment to generate an amount of cash flow equal to the initial amount invested.

NPV

Net Present Value, a financial metric used to evaluate the profitability of an investment or project, calculated by discounting the expected future cash flows to present day values and subtracting the initial investment cost.