On the Basis of Regression Equation We Can Decompose

question 55

Multiple Choice

On the basis of regression Equation we can decompose the variability of the dollar value of the asset,Var(P) ,into two separate components Var(P) = b² *Var(S) + Var(e) The first term in the right-hand side of the equation,b² *Var(S) represents

• A)the part of the variability of the dollar value of the asset that is related to random changes in the exchange rate.
• B)captures the residual part of the dollar value variability that is independent of exchange rate movements.
• C)none of the above

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Definitions:

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Production Level

The quantity of goods or services that a company is capable of producing over a given period of time.

Marginal Costs

The amount spent on producing an extra unit of a product or service.

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as rent or salaries.