A Variable Should Be Added to the Model Regardless of the Impact

question 10

True/False

A variable should be added to the model regardless of the impact (increase or decrease)on the adjusted r² value.

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Definitions:

Debt-Equity Ratio

A financial ratio that measures the relative proportion of shareholders' equity and debt used to finance a company's assets.

Financial Risk

The chance of incurring a loss in capital in an investment or business operation.

Business Risk

The potential for losses or less-than-expected profits within the operations of a company, not related to financial debt but to the business's environment and operations.

Levered Firms

Companies that have incurred debt. Leveraging amplifies both the potential returns and risks of investments.