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

A) Linear trend line
B) Exponential trend line
C) Quadratic trend line
D) Logarithmic trend line

User Gerik
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1 Answer

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Final answer:

The best trend line that fits the data for the daily stock returns of social media stocks is the linear trend line (option A).

Step-by-step explanation:

The best trend line that fits the data for the daily stock returns of social media stocks is the linear trend line (option A). A linear trend line is appropriate when the data points show a straight-line pattern. It is commonly used when the relationship between two variables is expected to be proportional.

On the other hand, an exponential trend line is best when the data points show a curved pattern that resembles an exponential growth or decay. A quadratic trend line is appropriate when the data points show a U-shaped or inverted U-shaped pattern.

A logarithmic trend line is suitable when the data points display a curved pattern that resembles a logarithmic function.

User Youjun Hu
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