Regression Analysis Is a Statistical Procedure for Developing a Mathematical

question 134

Multiple Choice

Regression analysis is a statistical procedure for developing a mathematical equation that describes how

• A)one independent and one or more dependent variables are related
• B)several independent and several dependent variables are related
• C)one dependent and one or more independent variables are related
• D)None of these alternatives is correct.

---

Definitions:

Single-Index Structure

A model used in finance to describe the returns of a portfolio using a linear relationship between the return of the portfolio and the return of a market index.

Expected Returns

The anticipated average return on an investment, taking into account the probability of different outcomes, including both gains and losses.

Variances of Returns

The measure of the spread between numbers in a data set, representing the average of the squared differences from the mean, specifically used in the context of the returns on investments.

Single-Index Model

A simplified model that explains a security's return with its sensitivity to a single market index.