Consider the following to answer the question(s) below:
A consumer research group investigating the relationship between the price of meat (per kilogram) and the fat content (grams) gathered data that produced the following scatterplot.
-Shown below is a correlation table showing correlation coefficients between stock price, earnings per share (EPS), and the price/earnings (P/E) ratio for a sample of 19 publicly traded companies. Which of the following statements is false? Correlation: Stock Price, EPS, P/E

A) Since r = 0.323 for P/E and Stock Price, there is a relatively weak positive correlation between P/E and Stock Price.
B) The strongest correlation is between EPS and Stock Price.
C) There is a weak negative correlation between P/E and EPS.
D) The strongest correlation is between P/E and Stock Price.
E) The weakest correlation is between P/E and EPS.

Question

Consider the following to answer the question(s) below:
A consumer research group investigating the relationship between the price of meat (per kilogram) and the fat content (grams) gathered data that produced the following scatterplot. 
-Shown below is a correlation table showing correlation coefficients between stock price, earnings per share (EPS), and the price/earnings (P/E) ratio for a sample of 19 publicly traded companies. Which of the following statements is false? Correlation: Stock Price, EPS, P/E

A) Since r = 0.323 for P/E and Stock Price, there is a relatively weak positive correlation between P/E and Stock Price. 
B) The strongest correlation is between EPS and Stock Price. 
C) There is a weak negative correlation between P/E and EPS. 
D) The strongest correlation is between P/E and Stock Price. 
E) The weakest correlation is between P/E and EPS.

Quizplus · Accepted Answer

The correlation coefficient between P/E and Stock Price (r = 0.765) is the strongest among the three pairs of variables. Therefore, statement D is false. Statement B is true since the correlation coefficient between EPS and Stock Price is the highest positive value (r = 0.895) in the table. Statement A is true since the correlation coefficient between P/E and Stock Price (r = 0.323) is positive but weak. Statement C is false since there is a positive correlation between P/E and EPS (r = 0.533), not a negative one. Statement E is false since the weakest correlation is between Stock Price and EPS (r = 0.048).

Consider the Following to Answer the Question(s) Below