The Proportion of Variability of the Dependent Variable Accounted for or Explained

question 107

Multiple Choice

The proportion of variability of the dependent variable accounted for or explained by the independent variable is called the _______.

• A)sum of squares error
• B)coefficient of correlation
• C)coefficient of determination
• D)covariance
• E)regression sum of squares

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Definitions:

Cost of Equity

The rate of return that a company needs to generate in order to compensate its equity investors, taking into account the risk associated with the investment.

Market Risk Premium

Market risk premium is the expected return on an investment over the risk-free rate, representing the compensation investors require for taking on higher risk.

Dividends

Funds distributed by a company to its shareholders, typically sourced from the firm's earnings.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the expected cost of new capital funding.