To Test Whether the Overall Regression Equation Is Statistically Significant

question 6

Multiple Choice

To test whether the overall regression equation is statistically significant one uses

• A) the t-statistic.
• B) the R²-statistic.
• C) the F-statistic.
• D) the standard error statistic.

---

Definitions:

CAPM

Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets.

Target Capital Structure

The mix of debt, equity, and other financing sources a company aims to use to fund its operations and growth.

Market Risk Premium

The additional financial return an investor aims to achieve by having a risky market portfolio instead of investments that are risk-free.

WACC

Weighted Average Cost of Capital, a calculation of a firm's capital cost that weighs each category of capital (equity, debt) proportionately.