A Predicted Value of a Dependent Variable

question 5

Multiple Choice

A predicted value of a dependent variable:

• A)represents the difference between the expected value of the dependent variable and its actual value.
• B)is always equal to the actual value of the dependent variable.
• C)is independent of explanatory variables and can be estimated on the basis of the residual error term only.
• D)represents the expected value of the dependent variable given particular values for the explanatory variables.

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Definitions:

Net Present Value

The disparity between cash inflows' present value and cash outflows' present value through a certain time frame, utilized to determine an investment's profitability.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Cash Break-even Point

The point at which a business's cash inflows equal its cash outflows, excluding financing.

Degree of Operating Leverage

A ratio that quantifies the sensitivity of a company's operating income to its sales, demonstrating the impact of fixed and variable costs on profitability.