Unlike the Coefficient of Determination,the Coefficient of Correlation in a Simple

question 42

Multiple Choice

Unlike the coefficient of determination,the coefficient of correlation in a simple linear regression ___________.

• A) can never have an absolute value greater than 1
• B) measures the percentage of variation explained by the regression line
• C) indicates whether the slope of the regression line is positive or negative
• D) measures the strength of association between the two variables more exactly

---

Definitions:

Internal Rate

Short for Internal Rate of Return (IRR), a metric used in capital budgeting to estimate the profitability of potential investments.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Useful Life

The estimated lifespan of a fixed asset, during which it can be expected to contribute to company operations.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, used in discounting to account for the time value of money.