A Corporate Researcher Runs Pearson R Correlations Among Three Variables

question 32

Short Answer

A corporate researcher runs Pearson r correlations among three variables, net income, gross income and amount spent on advertising. All correlations are significant. Net Income and Gross Income = .60 Net Income and Advertising = .53 Gross Income and Advertising = .35 Find the multiple R for predicting net income from both gross income and advertising. For questions 116 through 119, use the following: A researcher collects the following measures: Y mean = 50, with a standard deviation of 10 X1 mean = 100, with a standard deviation of 15 X2 mean = 200, with a standard deviation of 20 Significant correlations among the variables were found to be as follows: y and 1 = .60 y and 2 = .75 1 and 2 = .20

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market, indicating its risk compared to the market average.

Stock Portfolio

A collection of stocks held by an individual or institution, managed and adjusted in pursuit of certain financial goals.

Required Return

The minimum expected yield that investors demand for investing in a financial asset, taking into account the risk associated with the investment.

Beta

A measure of a stock's volatility in relation to the overall market; a beta higher than 1 indicates the stock is more volatile than the market.