Cierra, Inc. is attempting to assess its degree of economic exposure in euros. In order to do so, it has applied regression analysis to determine whether the percentage change in its total cash flow is related to the percentage change in the euro. A ____ and statistically significant slope coefficient resulting from this analysis implies that the cash flows are ____ related to the percentage changes in the euro.

Question

Quizplus · Accepted Answer

A positive slope coefficient would indicate a positive relationship between the percentage change in Cierra Inc.'s cash flow and the percentage change in the euro. This means that as the euro strengthens, Cierra's cash flow also increases. A statistically significant coefficient indicates that the relationship between the two variables is unlikely due to chance.