Suppose a Manager's Performance Is to Be Evaluated by Residual

question 179

Multiple Choice

Suppose a manager's performance is to be evaluated by residual income.Which of the following will NOT result in an increase in the residual income figure for this manager,assuming other factors remain constant?

• A) An increase in sales.
• B) An increase in the minimum required rate of return.
• C) A decrease in expenses.
• D) A decrease in operating assets.

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Definitions:

MSE

Mean Squared Error, a measure of the average of the squares of the errors—that is, the average squared difference between the estimated values and the actual value.

Least Squares Estimate

A statistical technique that determines the line of best fit for a model by minimizing the sum of the squares of the vertical differences (residuals) between the observed values and the values predicted by the model.

Intercept

In the context of mathematical graphs and equations, it refers to the point where a line or curve crosses an axis.

Regression Analysis

A statistical method for estimating the relationships among variables, often for predicting a dependent variable based on one or more independent variables.