I If an Inverse Relationship Exists Between the Dependent Variable

question 43

Multiple Choice

i. If an inverse relationship exists between the dependent variable and independent variables, the
Regression coefficients for the independent variables are positive.
ii. Given a multiple linear equation Y' = 5.1 + 2.2X1 - 3.5X2, assuming other things are held constant,
An increase of one unit in the second independent variable will cause a -3.5 unit change in Y.
iii. When the variance of the differences between the actual and the predicted values of the
Dependent variable are approximately the same, the variables are said to exhibit homoscedasticity.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) and (ii) are correct statements but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Current Dividends

The amount of money paid to shareholders from a company's current earnings.

Cumulative Voting

A voting system used by corporations allowing shareholders to allocate their entire vote in any proportion to one or more candidates for the board of directors.

EPS Growth Rate

A measure of the annualized rate of increase in earnings per share of a company over time.