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Principles of Finance

Review Questions

Principles of FinanceReview Questions
1 .
A correlation coefficient is calculated as − 0.92 . Provide an interpretation for this correlation coefficient.
2 .
Explain what a residual is and how this relates to the best-fit regression model.
3 .
Explain how to interpret the slope of the best-fit line.
4 .
Explain how to generate a prediction using a linear regression model.
5 .
Will the sign of the correlation coefficient always be the same as the sign of the slope of the best-fit linear regression model?
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