The Following Output Is Provided for a Linear Trend Regression-Based

question 37

Multiple Choice

The following output is provided for a linear trend regression-based forecasting model based on 12 months of data: Suppose that the actual sales for months 13-15 are: 720, 680, 800. Given this, which of the following is the forecast bias value for months 13-15?

• A) Approximately 77.7
• B) Approximately 233.2
• C) About -56.8
• D) Just under 80

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Definitions:

Value of the Firm

The total worth of a company based on its current market capitalization plus any debts, and minus any cash on the company's balance sheet.

Interest Tax Shield

The decrease in income tax liabilities due to permitted interest expense deductions.

Levered Firm

A corporation that has debt in its capital structure, indicating it uses borrowing (leverage) to finance its operations or expansions.

M&M Proposition I

A principle of financial theory stating that under perfect market conditions, the value of a firm is unaffected by how it is financed.