Larger Values of R² Imply That the Observations Are More

question 109

Multiple Choice

Larger values of r² imply that the observations are more closely grouped about the

• A) average value of the independent variables.
• B) average value of the dependent variable.
• C) least squares line.
• D) origin.

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Definitions:

ROE

Return on Equity - a financial ratio that measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Profit Margin

Profit margin is a financial metric that measures the percentage of profit a company retains after subtracting its costs from its revenue, reflecting the overall profitability of the business.

Equity Multiplier

A financial ratio indicating how much of a company's assets are financed by stockholder's equity, illustrating the degree of financial leverage used.