Which of the Following Is True of the Best-Fitting Line

question 31

Multiple Choice

Which of the following is true of the best-fitting line?

• A)It establishes statistical significance.
• B)It increases as the correlation decreases.
• C)It is rarely useful for prediction.
• D)It minimizes residuals.

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Definitions:

FVTPL

The acronym stands for Fair Value Through Profit or Loss; this designation refers to financial assets or liabilities that are recorded at fair value, with any changes directly affecting profit or loss.

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties, other than in a forced or liquidation sale.

Unrealized Gain

A profit that exists on paper resulting from an investment that has not yet been sold for cash, indicating an increase in value of the asset.

Equity Method

An accounting technique used to record an investor's proportional share of the associate company's earnings and losses.