On the Basis of Regression Equation We Can Decompose

question 56

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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