Definition of multiple regression

multiple regression

a statistical technique that uses two or
more independent variables to predict a dependent variable

Multiple regression

The estimated relationship between a dependent variable and more than one explanatory variable.

First-pass regression

A time series regression to estimate the betas of securities portfolios.

Forward looking multiple

A truncated expression for a P/E ratio that is based on forward (expected)
earnings rather than on trailing earnings.

Futures contract multiple

A constant, set by an exchange, which when multiplied by the futures price gives
the dollar value of a stock index futures contract.

least squares regression analysis

a statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the squares
of the vertical deviations between actual points and the
regression line; it can be used to determine the fixed and
variable portions of a mixed cost

Linear regression

A statistical technique for fitting a straight line to a set of data points.

Multiple Deposit Creation

The process whereby the money multiplier operates.

Multiple-discriminant analysis (MDA)

Statistical technique for distinguishing between two groups on the
basis of their observed characteristics.

Multiple-issuer pools

Under the GNMA-II program, pools formed through the aggregation of individual
issuers' loan packages.

Multiple Lives

Two or more death benefits based on one definition with different insureds.

Multiple rates of return

More than one rate of return from the same project that make the net present value
of the project equal to zero. This situation arises when the IRR method is used for a project in which negative
cash flows follow positive cash flows. For each sign change in the cash flows, there is a rate of return.

Multiples

Another name for price/earnings ratios.

Options contract multiple

A constant, set at $100, which when multiplied by the cash index value gives the
dollar value of the stock index underlying an option. That is, dollar value of the underlying stock index = cash
index value x $100 (the options contract multiple).

P/E ratio (PE ratio / multiple)

Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25. 50 = 10
times $2. 55
XYZ stock sells for 10 times earnings. P/E = Current stock price divided by trailing annual earnings per
share or expected annual earnings per share.

price-earnings (P/E) multiple (ratio)

Ratio of stock price to earnings per share.

Regression analysis

A statistical technique that can be used to estimate relationships between variables.

Regression analysis

Statistical analysis techniques that quantify the
relationship between two or more variables. The intent is quantitative
prediction or forecasting, particularly using a small population to forecast the
behavior of a large population.

Regression equation

An equation that describes the average relationship between a dependent variable and a
set of explanatory variables.

regression line

any line that goes through the means (or averages) of the set of observations for an independent variable and its dependent variables; mathematically, there is a line of “best fit,” which is the least squares regression line

Regression toward the mean

The tendency for subsequent observations of a random variable to be closer to its mean.

Second pass regression

A cross-sectional regression of portfolio returns on betas. The estimated slope is the
measurement of the reward for bearing systematic risk during the period analyzed.

Simple linear regression

A regression analysis between only two variables, one dependent and the other explanatory.

simple regression

a statistical technique that uses only one independent variable to predict a dependent variable

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