If a Simple Least Squares Regression Model Is Developed Based

question 110

True/False

If a simple least squares regression model is developed based on a sample where the two variables are known to be positively correlated, the sum of the residuals will be positive.

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Definitions:

Bankruptcy

A legal proceeding involving a person or business that is unable to repay outstanding debts, leading to asset liquidation or debt reorganization.

Corporate Tax Rate

Corporate tax rate is the percentage of a corporation's profits that is paid to the government as tax.

Debt Ratio

The portion of assets financed by debt, showing the extent to which a company relies on borrowed funds for its operations.

MM Model

Refers to the Modigliani-Miller theorem, a foundational concept in corporate finance that states that under certain market conditions, the value of a firm is unaffected by how it is financed.