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

question 11

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 Var(P) = b² * Var(S) + Var(e) The second term in the right-hand side of the equation,Var(e) 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:

Current Ratio

An indicator of how well a company can handle its immediate debts, assessing its ability to cover obligations maturing in one year or less.

Acid-test Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.

Debt-to-equity Ratio

The debt-to-equity ratio is a financial leverage ratio that compares a company's total liabilities to its shareholder equity, indicating how much the company is financing its operations through debt versus wholly owned funds.

Receivable Turnover

Receivable turnover is a financial ratio that measures how efficiently a company collects its accounts receivable, calculated by dividing net credit sales by average accounts receivable.