A Random Sample of Records of Electricity Usage of Homes

question 41

Multiple Choice

A random sample of records of electricity usage of homes gives the amount of electricity used in July and size (in square feet) of 135 homes.A regression was done to predict the amount of electricity used (in kilowatt-hours) from size.The residuals plot indicated that a linear model is appropriate.The model is
= 1,248 + 0.6 size.Explain what the slope of the line says about the electricity usage and home size.

• A)On average,the amount of electricity used increases by 1,248 kilowatt-hours when the size of the house is increased by a square foot.
• B)On average,the size of the house increases by 1,248 feet for every kilowatt-hour used.
• C)On average,the amount of electricity used is 0.6 kilowatt hours less than the size of the house.
• D)On average,the amount of electricity used increases by 0.6 kilowatt-hours when the size of the house is increased by a square foot.
• E)On average,the size of the house increases by 0.6 feet for every kilowatt-hour used.

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Definitions:

Vertical

A specific industry or group of companies that operates within the same segment of the economy, often within a supply chain.

Terminal Values

The projected value of an asset, investment, or company at the end of a specific period, often used in discounted cash flow analysis.

Target's Stock

Refers to the equity securities of a company that is the object of a merger or acquisition interest.

Risk Adjusted

Adjusting returns or valuations to take into account the level of risk involved, ensuring that comparisons account for different risk levels.