In the Graph of the Simple Linear Regression Equation, the Parameter

question 9

Multiple Choice

In the graph of the simple linear regression equation, the parameter ß₁ is the ___________ of the true regression line.

• A)slope
• B)x-intercept
• C)y-intercept
• D)end-point

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Definitions:

Sensitivity Analysis

Indicates exactly how much net present value will change in response to a given change in an input variable, other things held constant. Sensitivity analysis is sometimes called “what if” analysis because it answers this type of question.

Stand-alone Risk

The risk associated with a specific project or investment, considered independently from the broader company or portfolio risks.

NPV

Net Present Value; a calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate.

WACC (Weighted Average Cost of Capital)

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, including equity and debt.