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Basic Question 2 of 2
Jason wishes to establish the possible drivers of a company's percentage return on capital (ROC). He identifies performance measures such as the profit margin (%), sales, and debt ratio as possible drivers of ROC. He obtains the following results from the regression of ROC on profit margin (%), sales, and debt ratio.
Which independent variable(s) is (are) most likely statistically and significantly different from zero at the 5% significance level, assuming the sample size is 25?
A. Profit margin.
B. Sales and profit margin.
C. Sales and debt ratio.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
formulate a multiple linear regression model, describe the relation between the dependent variable and several independent variables, and interpret estimated regression coefficients;
CFA® 2025 Level II Curriculum, Volume 1, Module 1.