A Regression Shows How the ________ Is Affected by the ________

question 17

Multiple Choice

A regression shows how the ________ is affected by the ________.

• A) dependent variable; independent variable
• B) independent variable; cross-section
• C) independent variable; dependent variable
• D) independent variable; error term

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Definitions:

Efficient Markets

A financial market hypothesis suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher-than-average returns.

Informed Markets

Markets where all participants have access to all relevant information, leading to more efficient price determination.

Residual Claim

Stockholders’ claim to income and assets is the residual after all other claims are satisfied.

Common Shareholders

Individuals or entities that own common shares in a corporation, granting them voting rights and a claim on a portion of the company’s profits through dividends.