Which Limitation Is Applicable to Both Correlation and Regression

question 72

Multiple Choice

Which limitation is applicable to both correlation and regression?

• A)The degree of predictability will be underestimated if the underlying relationship is linear.
• B)Nothing can be inferred about the direction of causality.
• C)Restrictions in range and unreliable measures are uncommon.
• D)The relative importance of different predictor variables cannot be assessed.

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Definitions:

Journal Entries

Journal entries are records of financial transactions in accounting, documented in chronological order, indicating accounts affected, amounts, and a brief description of the transaction.

Forward Rate

An agreed-upon price for a currency or asset to be exchanged at a future date, used for hedging or speculation.

Forward Contract

A financial derivative that represents a customized contract between two parties to buy or sell an asset at a specified price on a future date.

Carrying Value

The book value of assets and liabilities, reflecting their recorded cost minus any depreciation, amortization, or impairment charges.