In a Multiple Regression Problem Involving Two Independent Variables,if B₁

question 48

Multiple Choice

In a multiple regression problem involving two independent variables,if b₁ is computed to be +2.0,it means that

• A) the estimated mean of Y increases by 2 units for each increase of 1 unit of X₁, without regard to X₂.
• B) the estimated mean of Y increases by 2 units for each increase of 1 unit of X₁, holding X₂ constant.
• C) the estimated mean of Y is 2 when X₁ equals zero.
• D) the relationship between X₁ and Y is significant.

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Definitions:

Portfolio Weight

The percentage composition of a particular holding in relation to the total value of the portfolio, used to assess diversification and risk.

Security Market Line

A graphical representation in financial market theory that depicts the relationship between risk (measured as beta) and expected return for the entire market.

Beta

A way of measuring the level of erratic behavior, or systemic threat, in a security or investment group in perspective of the general market.

Expected Return

The average of all possible returns for an investment, weighted by their respective probabilities.