Bobby is working with a scatter plot that describes a stock’s value in the years 1990 to 2000. He finds the best fit line for the scatter plot:

y = 2x – 300, where y represents the stock price and x represents time

Which of the following conclusions can be made from this best fit line?

Question

Bobby is working with a scatter plot that describes a stock’s value in the years 1990 to 2000. He finds the best fit line for the scatter plot:

y = 2x – 300, where y represents the stock price and x represents time

Which of the following conclusions can be made from this best fit line?

anonymous · Answer

A:The stock’s value will always go up.		B:The stock’s value will decrease.
C:It is possible to estimate the stock’s value between 1990 and 2000 with this equation.		D:
It is possible to estimate the stock’s original value with this equation.

kirbykirby · Answer

|dw:1361915795830:dw|

anonymous · Answer

What does that mean

kirbykirby · Answer

it means that as x increases (as you move towards the right on your graph), you see that the y value is increasing as well.

When y increases as x increases, you have a positive slope, and the value of y (your stock) will be increasing over time

anonymous · Answer

so then the answer is:
A:The stock’s value will always go up.

kirbykirby · Answer

Can you only select one answer?

anonymous · Answer

yea

anonymous · Answer

A:The stock’s value will always go up.		B:The stock’s value will decrease.
C: It is possible to estimate the stock’s value between 1990 and 2000 with this equation.	
D: It is possible to estimate the stock’s original value with this equation.

kirbykirby · Answer

Hmm really. Well since this is a fitted line from a set of data points, we can't assume that beyond a certain time (beyond year 2000), that the stock value will assume the same function, because we do not have data for it. So while it is increasing, it is increasing for sure only between 1990 and 2000, so I wouldn't select A (the choice implies that the laue will increase forever)

AFter thinking about it, the formulation between C and D is tricky. You might think that either one would be okay, but the question says that you only have the values for year 1990-2000, and so you dont actually know if the original stock price began at 1990 or even before this data collection date (This is the same problem as in A: we don't have data beyond the interval 1990-2000). Thus, D is not good.

So, I think C is the safest answer

kirbykirby · Answer

laue = value* sorry I did a typo

kirbykirby · Answer

Does it make sense, or you need more explanation?

anonymous · Answer

i get it thanks a lot!! :)

kirbykirby · Answer

:) yw