Which
of the following statements is (are) true with respect
to the coefficient of determination?
I.
Coefficient of determination and correlation coefficient
must always have the same algebraic sign (i.e. plus
or minus).
II. As the sum of squares of the error terms increases,
coefficient of determination will increase as well.
III. Coefficient of determination measures the proportion
of the total variation in Y that is accounted for by
the variation in X.
IV. As the ratio of regression sum of squares to total
sum of squares increases, correlation coefficient will
increase.
a) II and III only.
b) I, II, and IV only.
c) III and IV only.
d) I and III only.
The correct answer is: c)
(I) is incorrect because coefficient of determination
will always be positive, whereas correlation coefficient
may be positive or negative.
RELATED FAQS

A portfolio hedge is purchased in the form of a spread ...
First, calculate the net gains/losses under each probability. At 50, the value is: cost of the spread ($1 x 100 share put) ... 
Rennie Asada, CFA, is a portfolio manager with Martek Securities ...
The correct answer is: a) The guiding principle behind Standard VIB is to take care of clients first, and only after the ... 
Which of the following statements is (are) true with respect to priceearnings (P/E) ...
The correct answer is: b) The reason choice I is true is because during a recession, corporate earnings will generally fall ... 
A manager is claiming that her stock picks, on average ...
The correct answer is: d) 2005 CFA Level 1 LOS: 3.1.B.m
 No results found.