Explain the Concept and Purpose of Regression

question 20

Essay

Explain the concept and purpose of regression. Give an example of linear regression and an example of multiple regression.

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Definitions:

Stock Portfolio

A collection of stocks owned by an individual or an institution, diversified to spread risk.

Slope

In mathematics, the slope measures the steepness, incline, or grade of a line in the coordinate system, often representing the rate of change.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility, and less than 1 indicates lower volatility.

Standard Deviation

A measure of the dispersion or variation in a distribution or set of data, indicating how much individual values differ from the mean.