Fitting a Model Too Closely to Sample Data, Resulting in a Model

question 42

Multiple Choice

Fitting a model too closely to sample data, resulting in a model that does not accurately reflect the population is termed as

• A)approximation.
• B)hypothesizing.
• C)overfitting.
• D)postulating.

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Definitions:

Capital Intensity Ratio

A financial metric that compares a company's total assets to its sales revenue, used to evaluate how much capital is needed to generate sales.

Total Assets

The sum of all assets owned by a company, including current, fixed, and intangible assets, as reported on the balance sheet.

Capacity Utilization

The percentage of a firm or industry's total production capacity that is actually being used over a specific period.

Plug Variable

A variable that is used in financial modeling to make the balance sheet balance, often representing the financing needed or surplus cash.