Covariation Tells Us

question 101

Multiple Choice

Covariation tells us:

• A) that one variable causes changes in another variable.
• B) that two variables are associated with each other.
• C) that two variables are not associated with each other.
• D) that one variable is not responsible for changes in another variable.

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Definitions:

Interest Rate

The interest rate applied to a loan, frequently shown as an annual percentage of the loan's outstanding figure to the borrower.

Annuity

A level stream of cash flows for a fixed period of time.

Preferred Stock Dividends

Dividends that are paid to preferred stockholders before any dividends are paid to common stockholders.

Perpetuity

A type of annuity that pays an infinite series of cash flows, with the first payment occurring one period from now, indefinitely into the future.