According to the Residual Plot for a Linear Regression Model

question 33

Multiple Choice

According to the residual plot for a linear regression model shown to the right, the linear model

• A) okay because the same number of points is above the Line as below it.
• B) okay because the association between the two Variables is fairly strong.
• C) no good because the correlation is near 0.
• D) no good because some residuals are large.
• E) no good because of the curve in the residuals.

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Definitions:

Outstanding Balance

The outstanding balance is the amount of debt, or loan, that remains to be paid off.

Cash Flows

A reiteration emphasizing on multiple streams or instances of money being transferred into and out of a business or investment.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Trial-And-Error

A method of problem-solving that involves testing various methods of achieving an outcome until a satisfactory solution is found.