Question

A financial firm created a scatter plot for the daily stock returns of social media works. Which trend line best fits the data?

1) Linear trend line
2) Exponential trend line
3) Quadratic trend line
4) Logarithmic trend line

Answer 1

The best trend line for a scatter plot of daily stock returns of social media companies would be a linear trend line if the data points suggest a straight-line relationship. This corresponds to option 1, which is the correct option with the information provided.

option 1, a linear trend line, is the correct option.

Step-by-step explanation:

When creating a scatter plot for daily stock returns of social media companies, the trend line that best fits the data depends on the pattern displayed by the data points. If the data points seem to fall on a straight line, a linear trend line would be suitable. If the data trends upward or downward at a consistent rate on a logarithmic plot, indicating an exponential behavior, then an exponential trend line might be a better choice.

However, with the information provided, it appears that the data points suggest a straight-line relationship, It is important to note that while a linear fit might seem best, it is necessary to examine the data points closely to confirm that they indeed exhibit a linear pattern and not some other type of relationship.

Indicating that option 1, a linear trend line, is the correct option.