Use the following to answer the question(s) below.
Stock prices and earnings per share (EPS) data were collected for a sample of 15 companies. Below are the regression results. The dependent variable is Stock Price.
-Which of the following statements is true about the correlation between stock price and EPS?
A) The correlation is negative.
B) The correlation is not significantly different from zero.
C) The correlation is positive and significantly different from zero.
D) We fail to reject the null hypothesis Hο : ρ ≠ 0.
E) As t statistic for the correlation coefficient test equals 15.82 and associated P-value is very small, we fail to support the alternative hypothesis HΑ : ρ ≠ 0.

Question

Use the following to answer the question(s) below.
Stock prices and earnings per share (EPS) data were collected for a sample of 15 companies. Below are the regression results. The dependent variable is Stock Price. 
-Which of the following statements is true about the correlation between stock price and EPS?
A) The correlation is negative. 
B) The correlation is not significantly different from zero. 
C) The correlation is positive and significantly different from zero. 
D) We fail to reject the null hypothesis Hο : ρ ≠ 0. 
E) As t statistic for the correlation coefficient test equals 15.82 and associated P-value is very small, we fail to support the alternative hypothesis HΑ : ρ ≠ 0.

Quizplus · Accepted Answer

The regression results show that the coefficient of EPS is positive and statistically significant (t value = 5.674, p-value = 0.000) which indicates a positive correlation between stock price and EPS. Therefore, the correct choice is C, which states that the correlation is positive and significantly different from zero.

Use the Following to Answer the Question(s) Below