A company using regression analysis to correlate income to a variety of sales indicators found that the relationship between the number of sales managers in a territory and net income for the territory had a correlation coefficient of -1. Which is the best description of this situation?
A) More sales managers should be hired.
B) Imperfect negative correlation.
C) Perfect inverse correlation.
D) There is no correlation at all.

Question

Quizplus · Accepted Answer

A correlation coefficient of -1 indicates a perfect inverse correlation between the number of sales managers in a territory and net income for the territory. This means that as the number of sales managers increases, the net income decreases, and vice versa. There is no need to hire more sales managers as this would result in lower net income.

A Company Using Regression Analysis to Correlate Income to a Variety