If One Found That the Sum of the Residuals from a Regression

question 46

True/False

If one found that the sum of the residuals from a regression line (with an intercept) was a large negative
value, one could conclude that there is a negative relationship between the independent and dependent
variables.
There must have been a calculation error since the residuals sum to 0 (apart from rounding error).

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Definitions:

Homemade Dividend

A strategy where investors create their own dividend policy by selling a portion of their holdings in a stock rather than relying on the company's dividend payments.

Dividend Reinvestment Program

A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.

Transaction Costs

Expenses incurred when buying or selling goods and services, including fees, taxes, and other charges.

Residual Dividend Policy

A strategy where dividends are based on earnings minus funds the firm retains to finance the equity portion of its investment and working capital requirements.