On the Basis of Regression Equation $P = a + b \times S + e$

question 37

Multiple Choice

On the basis of regression Equation $P = a + b \times S + e$ we can decompose the variability of the dollar value of the asset,Var(P) ,into two separate components.

• A)Cov(P,S) = b² * Var(P) + Var(S)
• B)Var(P) = b² * Var(S) + Var(e)
• C)Cov(P,S) = b² * Cov(S,P) + Cov(S,e)
• D)Var(P) = b² *Var(S)
• E)None of the above