BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

BUSINESS ANALYTICS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
If the covariance between two variables is near 0, it implies that ____
A
a positive relationship exists between the variables
B
the variables are not linearly related
C
the variables are negatively related
D
the variables are strongly related
Explanation: 

Detailed explanation-1: -A correlation near 0 indicates no linear association between the variables.

Detailed explanation-2: -A zero covariance means that the two variables are not related.

Detailed explanation-3: -If the covariance is zero, then the cases in which the product was positive were offset by those in which it was negative, and there is no linear relationship between the two random variables.

Detailed explanation-4: -Covariance indicates the relationship of two variables whenever one variable changes. If an increase in one variable results in an increase in the other variable, both variables are said to have a positive covariance. Decreases in one variable also cause a decrease in the other.

Detailed explanation-5: -If the value of the simple correlation coefficient is zero, it means that there no relation whatsoever between the variables.

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