If There Were a Perfect Positive Correlation Between Two Interval/ratio

question 8

Multiple Choice

If there were a perfect positive correlation between two interval/ratio variables, Pearson's r test would give a correlation coefficient of

• A) -.33.
• B) +1.
• C) +.88.
• D) -1.

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Definitions:

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where the interest that has been added also earns interest.

Equal Payments

A repayment structure where payments are the same amount each period, as seen in some loans and mortgages.

Annuity Due

An annuity whose payments are made at the beginning of each period.