A Regression Analysis of Company Profits and the Amount of Money

question 83

Multiple Choice

A regression analysis of company profits and the amount of money the company spent on advertising produced a R2 = 0.72. Which of these is true?
I. This model can correctly predict the profit for 72% of companies.
II. 72% of the variance in company profit can be accounted for by the model.
III. On average, companies spend about 72% of their profits on advertising.

• A) None
• B) I only
• C) II only
• D) III only
• E) I and III

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Definitions:

Federal Law

Refers to the body of law created by the national government of a country, encompassing statutes, regulations, and case law that apply across the entire nation.

Brokerage Firm

A company that provides access to the stock market for investors, offering trading services, financial advice, and investment management.

Financial Interest

Financial interest denotes a stake or concern in the financial success, returns, or profits of an investment, business, or any economic entity.

Prospectus

A public document required by law before securities are issued, revealing material facts about that security and its issuer, with such true, full, and plain disclosure that a potential investor may make an informed decision as to the riskiness and price of that security.