I What Is the Range of Values That the Coefficient

question 123

Multiple Choice

i. What is the range of values that the coefficient of determination can assume? ii. What is a measure of the scatter of observed values around the regression line called?
iii. If the correlation between sales and advertising is +0.6, what percent of the variation in sales can be attributed to advertising?

• A) 0% to 1%; standard variation;36%.
• B) both positive and negative values; standard deviation;6%.
• C) 0% to 100%; standard error of the estimate; 36%.
• D) 0% to 100%; standard variation;36%.
• E) both positive and negative values; standard error of the estimate; 36%.

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Definitions:

Horizontal Mergers

A business consolidation that occurs between firms that operate in the same industry or production stage.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, resulting in the average cost per unit of output decreasing with increasing scale.

Conglomerate Merger

A type of merger where two companies operating in unrelated business areas combine their operations.

Diversification

An investment strategy to reduce risk by allocating investments amongst various financial instruments, industries, or other categories.