Interpret the Value of Correlation Coefficients and Squared Correlations $$\begin{array} { l r r } & \text { Stock Price } & \text { EPS } \\\text { EPS } & 0.875 & \\\text { PE } & 0.323 & - 0.111\end{array}$$

Multiple Choice

Interpret the value of correlation coefficients and squared correlations.
-Shown below is a correlation table showing correlation coefficients between stock
Price, earnings per share (EPS) and price / earnings (P / E) ratio for a sample of 19
Publicly traded companies. Which of the following statements is false?
Correlations: Stock Price, EPS, PE $$\begin{array} { l r r } & \text { Stock Price } & \text { EPS } \\\text { EPS } & 0.875 & \\\text { PE } & 0.323 & - 0.111\end{array}$$

A) EPS is the best predictor of stock price.
B) The strongest correlation is between EPS and stock price.
C) There is a weak negative association between PE and EPS.
D) PE is the best predictor of stock price.
E) The weakest correlation is between PE and EPS.