Statement 1: The company reduced its workforce due to financial losses. Statement 2: Stock prices of the company dropped by 20% the next month. What is the relationship between these two?
Correct: C
Workforce reduction (Statement 1) is a response to losses (cause), and the stock price drop (Statement 2) may follow as investors react negatively. However, there is no direct causal link from Statement 1 to Statement 2. The financial losses (not Statement 1) are the root cause. Hence, the two events are independent effects of a common cause (financial losses).