When Using a Multiple Regression Model,we Assume That Error Terms

question 132

Multiple Choice

When using a multiple regression model,we assume that error terms (residuals) are distributed according to a(n) ________________ distribution.

• A)Binomial
• B)Normal
• C)Exponential
• D)Poisson

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Definitions:

IRR

Internal Rate of Return is a metric used in financial analysis to estimate the profitability of potential investments, representing the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Project Risk

The potential for encountering unknown or unforeseen factors that can lead to project failure, such as cost overruns, delays, and scope creep.

Cost of Equity

The return that shareholders require or expect to realize on their investment, representing the opportunity cost of investing in the company.

Yield

The earnings generated and realized on an investment over a particular period, expressed as a percentage of the investment's cost or current market value.