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:

Market Price

The existing market price for buying or selling an asset or service.

Airline Flights

Scheduled services operated by airlines for the transportation of passengers and cargo between different destinations.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Airlines

Companies that provide air transport services for traveling passengers and freight.