Your Client's Company Wants to Determine the Relationship Between Its

question 2

Multiple Choice

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver.The output of regression analysis showed the following information:
Intercept Coefficient = 89,620
X Variable 1 Coefficient = 62.53
R-square = 0.9852
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Should your client use this information to predict monthly operating costs?

• A)Yes,because R-square is so high.
• B)No,because R-square is so high.
• C)Yes,because regression analysis can be relied upon.
• D)There is not enough information to make this prediction.

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Definitions:

Market Risk

The potential for investment losses stemming from elements that impact the general functioning of the financial markets.

Unique Risk

The risk specific to an individual investment or small group of investments, often reducible through diversification.

Time Horizon

The duration for which an investment is anticipated to be maintained prior to its sale.

Investment Period

This term refers to the span of time during which an investor holds onto a specific security or portfolio of investments with the goal of achieving their investment objectives.