“For our regression model to be valid, a linear relationship must exist between EPS growth and changes in return spread.” This statement implies that:

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The correlation coefficient between EPS growth and Changes in return spread must be greater than zero but less than one.

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EPS growth and changes in return spread must be discrete random variables.

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The slope coefficient and the intercept are raised to the first power only, and neither of them is divided or multiplied by another regression parameter.

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“For our regression model to be valid, a linear relationship must exist between ...

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