Recognizing That It May Be in Managers' Best Interests to Be

question 2

Multiple Choice

Recognizing that it may be in managers' best interests to be overly optimistic when proposing projects, how might firms effectively control this impulse?

• A)employ capital rationing
• B)discontinue investment proposals
• C)fire managers after their first mistake
• D)fund all project proposals

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Definitions:

Coefficient of Determination

A statistical measure that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

Correlation

A statistical measure that expresses the extent to which two variables change together, ranging from -1 to 1.

Pearson Correlation

A measure of the linear relationship between two variables, ranging from -1 to 1, where 1 means a perfect positive correlation and -1 means a perfect negative correlation.

Correlation Coefficient

A statistical measure that quantifies the degree of relationship or association between two variables.