The Sample Regression Line Estimated by OLS

question 21

Multiple Choice

The sample regression line estimated by OLS

• A)has an intercept that is equal to zero.
• B)is the same as the population regression line.
• C)cannot have negative and positive slopes.
• D)is the line that minimizes the sum of squared prediction mistakes.

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Definitions:

External Financing

Funding obtained from sources outside the company, including bank loans, issuance of equity or debt, and other borrowing avenues.

Sales Forecast

An estimation of the sales a company expects to achieve over a certain period in the future.

Additional Funds Needed (AFN)

Those funds required from external sources to increase the firm’s assets to support a sales increase. A sales increase will normally require an increase in assets. However, some of this increase is usually offset by a spontaneous increase in liabilities as well as by earnings retained in the firm. Those funds that are required but not generated internally must be obtained from external sources.

Pro Forma Financial Statements

Financial documents that project a company's future financial performance based on certain assumptions.