Question #86

Reading: Reading 1 Multiple Regression

PDF File: Reading 1 Multiple Regression.pdf

Page: 41

Status: Unattempted

Correct Answer: A

Part of Context Group: Q86-88 First in Group
Shared Context
- If the number of analysts on NGR Corp. were to double to 4, the change in the forecast of NGR would be closest to? A) −0.035. B) −0.055. C) −0.019.
Question
Based on a R2 calculated from the information in Table 2, the analyst should conclude that the number of analysts and ln(market value) of the firm explain:
Answer Choices:
A. 18.4% of the variation in returns
B. 84.4% of the variation in returns
C. 15.6% of the variation in returns
Explanation
R2 is the percentage of the variation in the dependent variable (in this case, variation of returns) explained by the set of independent variables. R2 is calculated as follows: R2 = (SSR / SST) = (0.103 / 0.662) = 15.6%.
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