A Regression Analysis of Company Profits and the Amount of Money

question 170

Multiple Choice

A regression analysis of company profits and the amount of money the company spent on advertising produced a R² = 0.72.Which of these is true?
I.This model can correctly predict the profit for 72% of companies.
II.72% of the variance in company profit can be accounted for by the model.
III.On average, companies spend about 72% of their profits on advertising.

• A)None
• B)I only
• C)II only
• D)III only
• E)I and III

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Definitions:

Disclosure

The act of making information known publicly, especially financial information by a company to comply with legal requirements and inform investors.

LIFO

Last In, First Out, an inventory valuation method where the goods last added to inventory are the first to be sold.

Periodic

Pertaining to or occurring at regular intervals.

Perpetual Basis

An approach or method without a predetermined end date, continuing indefinitely.