Which of the Following Possible Response Variables Is Most Appropriate

question 74

Multiple Choice

Which of the following possible response variables is most appropriate to predict using a regression tree?

• A) political party preference of a registered voter
• B) rate of return on an investment
• C) option(s) a new car buyer will select
• D) which borrower(s) will default on a loan
• E) whether or not a fitness center member will renew their membership

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Definitions:

Debt Ratio

A financial ratio that measures the proportion of a company's assets that are financed by debt.

Assets

Economic resources owned or controlled by an individual or entity that are expected to produce value or benefit in the future.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Interest

The charge for borrowing money or the return on invested capital, typically expressed as an annual percentage rate.