A Study of the Top MBA Programs Attempted to Predict

question 53

Multiple Choice

A study of the top MBA programs attempted to predict the average starting salary (in $1000's) of graduates of the program based on the amount of tuition (in $1000's) charged by the program and the average GMAT score of the program's students. The results of a regression analysis based on a sample of 75 MBA programs is shown below: Least Squares Linear Regression of Salary Interpret the coefficient of determination value shown in the printout.

• A) We can explain 68.57% of the variation in the average starting salaries around their mean using the model that includes the average GMAT score and the tuition for the MBA program.
• B) We expect most of the average starting salaries to fall within $41,353 of their least squares predicted values.
• C) We expect most of the average starting salaries to fall within $20,676 of their least squares predicted values.
• D) At α = 0.05, there is insufficient evidence to indicate that something in the regression model is useful for predicting the average starting salary of the graduates of an MBA program.

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Definitions:

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties.

Accelerated Depreciation

A depreciation method that allows a larger depreciation deduction in the early years of an asset's life and smaller deductions in the later years.

Straight-Line Method

An accounting method that allocates an equal portion of the cost of an asset over its useful life for the purposes of depreciation.

Depreciation Expense

Allocating the expense of a physical asset in a structured manner throughout its service life.