Researcher Studied the Relationship Between Family Income and Amount of Money

question 694

Multiple Choice

researcher studied the relationship between family income and amount of money spent on an
Automobile. She calculated that $R ^ { 2 } = 45 \%$
Which is the correct interpretaion?

• A) 45% of the variability in car price can be explained by using income.
• B) None of these
• C) The probability of predicting the correct price of a car is 45%.
• D) 45% of the price of the car can be predicted by using income.
• E) The car price fluctuates 45% more than income.

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Definitions:

Net Present Value

A financial metric that calculates the value of a project or investment in today's dollars by discounting future cash flows to the present.

Security Market Line

A graphical representation in the Capital Asset Pricing Model (CAPM) that displays the expected return of an investment as a function of its beta, or systematic risk.

Risky Projects

Initiatives or investments that carry a high level of uncertainty or likelihood of not achieving the expected financial returns.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, providing a measure that reflects the relative significance of each number.