1. If net revenue at a firm is about 10% of gross sales, then a scatterplot of net revenue versus gross sales would show a nonlinear pattern rather than a line.
2. If two variables are linearly associated, the peak in the histogram of the explanatory variable will line up with the peak in the histogram of the other variable.
3. If the correlation between the growth of a stock and the growth of the economy as a whole is close to 1, then this would be a good stock to hold during a recession when the economy shrinks.
4. If the covariance between x and y is 0, then the correlation between x and y is 0 as well.
5. If the correlation between x and y is 1, then the points in the scatterplot of y on x all lie on a single line with slope sy>sx.
6. An accountant at a retail shopping chain accidentally calculated the correlation between the phone number of customers and their outstanding debt. He should expect to find a substantial positive correlation.

  • CreatedJuly 14, 2015
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