I in Order to Visualize the Form of the Regression

question 133

Multiple Choice

i. In order to visualize the form of the regression equation, we can draw a scatter diagram.
ii. When a regression line has a zero slope, indicating a lack of a relationship, the line is vertical to the x-axis.
Iii) In regression analysis, the predicted value of Y' rarely agrees exactly with the actual Y value, i.e., we expect some prediction error.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) and (ii) are correct statements, but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Reinvestment Assumptions

Reinvestment assumptions pertain to the conditions under which profits or returns from an investment are assumed to be reinvested to generate additional earnings.

Internal Rate

An abbreviation for Internal Rate of Return; a metric used in financial analysis to estimate the profitability of potential investments.

Net Present Value

A calculation used to assess the profitability of an investment by determining the difference between the present value of cash inflows and outflows.

Incremental Cash Flows

Additional cash flows from taking on a new project, crucial for analysis in capital budgeting decisions to determine a project's potential profitability.