When using linear regression with a dummy variable to measure a market timer's performance, the characteristic line for a superior performer would have the following characteristic
A) the smaller the market return, the greater the slope.
B) slope on the right greater than the slope on the left.
C) a straight line over the whole range of market returns.
D) a flat shape with slope of 0.

Question

Quizplus · Accepted Answer

A superior market timer would have a characteristic line with a steeper slope when the market is performing well, indicating better performance during up markets.

When Using Linear Regression with a Dummy Variable to Measure