An Real Estate Analyst Believes That the Three Main Factors

question 46

Multiple Choice

An real estate analyst believes that the three main factors that influence an apartment's rent in a college town are the number of bedrooms,the number of bathrooms,and the apartment's square footage.For 40 apartments,she collects data on the rent (y,in $) ,the number of bedrooms (x₁) ,the number of bathrooms (x₂) ,and its square footage (x₃) .She estimates the following model as Rent = β₀ + β₁ Bedroom + β₂ Bath + β₃ Sqft + ε.The following ANOVA table shows a portion of the regression results. The coefficient of determination indicates that __________.

• A) 19.08% of the variation in Rent is explained by the variation in the explanatory variables
• B) 19.08% of the variation in the explanatory variables is explained by the variation in Rent
• C) 80.92% of the variation in Rent is explained by the variation in the explanatory variables
• D) 80.92% of the variation in the explanatory variables is explained by the variation in Rent

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Definitions:

Book Value

Book value is the value of an asset according to its balance sheet account balance, calculated by subtracting any liabilities or obligations related to the asset from its original cost.

Fair Value

The amount one would get from selling an asset or the cost to move a liability in a structured exchange among market players on the evaluation date.

Equity Method

An accounting method used to assess the profits earned by investments in other companies, where the investment is recorded at cost and adjusted according to the investor's share of the investee's profit or loss.

Fair Value Option

The fair value option is an accounting choice that allows companies to record certain financial assets and liabilities at their fair market value to provide a more relevant measurement of their financial position.