An investor collects data about 20 companies for potential stock purchasing. For each company, the number of employees is plotted on the x -axis against the stock price on the y -axis. The value of r for the resulting scatterplot is 0.18 Which statement is a correct interpretation of this value?
Answer
A
There is a strong negative relationship between the number of employees and the stock price.
B
Since the relationship is weak, adding more employees will decrease the stock price.
C
There is a weak positive relationship between the number of employees and the stock price.
D
Since the relationship is strong, adding more employees will increase the stock price.
Explanation
The correlation coefficient r describes the direction and strength of a linear relationship. Since r = 0.18 is positive but close to 0, it indicates a weak positive relationship between the number of employees and stock price. It does not show that changing the number of employees causes stock prices to change.
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