SCENARIO 14-6 One of the Most Common Questions of Prospective House Buyers

question 208

Multiple Choice

SCENARIO 14-6
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y) . To provide its customers with information on that matter, a large real estate firm used the following 2 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X₁ ) and the amount of insulation in inches ( X ₂ ) . Given below is EXCEL output of the regression model.



Also SSR (X₁ | X₂) = 8343.3572 and SSR (X₂ | X₁) = 4199.2672
-Referring to Scenario 14-5,what are the predicted sales (in millions of dollars) for a company spending $100 million on capital and $100 million on wages?

• A)15,800.00
• B)16,520.07
• C)17,277.49
• D)20,455.98

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Definitions:

Risk-Free Return

The theoretical rate of return of an investment with zero risk of financial loss.

Dollar-Weighted Return

A method of calculating an investment's return that takes into account the timing and size of cash flows, providing a more accurate measure of personal investment performance.

Dividend

A portion of a company's earnings that is paid to shareholders, usually on a quarterly basis, as determined by the company's board of directors.

Jensen's Measure

A performance evaluation method that calculates the excess return a fund generates over its expected return, given its level of risk as measured by beta.