Which Correlation Coefficient Should We Use If We Want to Find

question 9

Multiple Choice

Which correlation coefficient should we use if we want to find out whether a relationship exists between scores from one interval variable and one ordinal variable?

• A)The Pearson correlation coefficient
• B)The Spearman rank-order correlation coefficient
• C)The point-biserial correlation coefficient
• D)The nonlinear correlation coefficient

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Definitions:

Options Contract

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date.

Future Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future.

Swap Contract

A financial derivative agreement between parties to exchange cash flows or other financial instruments over a specified time period.

Bond Discount

The discrepancy between a bond's nominal value and its selling price that occurs when the bond is retailed at a price lower than its nominal value.