The Least-Squares Regression Method

question 9

Multiple Choice

The least-squares regression method:

• A)fits a line to data by minimizing the sum of the squared errors from the line.
• B)is generally less accurate than the high-low method.
• C)can be used only if the fixed cost element is larger than the variable cost element.
• D)can be used only if the fixed cost element is smaller than the variable cost element.

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Definitions:

Account Earning

The income generated from an investment or the revenue accrued from a bank account over a specific period.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.

Savings Bond

Government-issued bonds that are designed for individual investors and offer a fixed interest rate over a fixed period of time.

Matures

Refers to the point in time when a financial instrument, like a bond or loan, reaches its due date and the principal amount must be repaid.