Medium2 marksMultiple Choice
Statistical TechniquesSyllabus BCorrelation

ACCA · Question 04 · Statistical Techniques

Section A

AgriYield Corp is analyzing the relationship between the amount of specialized fertilizer applied (x) and the resulting crop yield (y). The correlation coefficient (r) is calculated as +0.85. Which of the following statements is the most accurate interpretation of this result?

Answer options:

A.

85% of the variation in crop yield is explained by the amount of fertilizer applied.

B.

There is a strong positive linear relationship between fertilizer applied and crop yield.

C.

Applying more fertilizer guarantees an 85% increase in crop yield.

D.

There is a weak positive linear relationship, as the value is less than 1.0.

How to approach this question

Recall that the correlation coefficient (r) ranges from -1 to +1. A value of +0.85 is close to +1, indicating a strong positive linear relationship.

Full Answer

B.There is a strong positive linear relationship between fertilizer applied and crop yield.✓ Correct
The correlation coefficient (r) measures the strength and direction of a linear relationship between two variables. +0.85 is a strong positive correlation. Option A incorrectly describes r-squared (0.85^2 = 0.7225).

Common mistakes

Confusing 'r' with 'r-squared' (Option A is the most common distractor).

Practice the full ACCA MA — Management Accounting Practice Exam 3

38 questions · hints · full answers · grading

More questions from this exam