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.
MORE FAQS

What does a negative correlation coefficient mean?

What is the difference between a copay and a deductible?

Can the correlation coefficient be used to measure dependence?

How does correlation affect the stock market?

What is the correlation between American stock prices and the value of the U.S. dollar?

How do I calculate correlation between market indicators and specific stocks?

What two components are used to calculate riskadjusted return? I ...

How does the risk of investing in the Internet sector compare to the broader market?

What does it mean if the correlation coefficient is positive, negative, or zero?

What techniques are most useful for hedging exposure to the metals and mining sector?

Which of the following statements is (are) true with respect to the calculation of returns of composites ...

Which TWO statements are TRUE about writing covered calls? I ...

How can I use a regression to see the correlation between prices and interest rates?

Which of the following statements is (are) true with respect to the factors that a manager must take ...

Which of the following statements is (are) true with respect to setting the proper constraints in managing ...

How many attempts at each CFA exam is a candidate permitted?

Are hedge funds regulated by FINRA?

Do financial advisors need to pass the Series 7 exam?

Do financial advisors need to be approved by FINRA?

How does a broker decide which customers are eligible to open a margin account?
RELATED FAQS

What does a negative correlation coefficient mean?
Discover the meaning of a negative correlation coefficient, how this compares to other correlation coefficients and examples ... 
What is the difference between a copay and a deductible?
Learn how the correlation coefficient may be used to predict the relationship between the returns of two stocks, but also ... 
Can the correlation coefficient be used to measure dependence?
Understand the coefficient of correlation and its use in determining the relationship between two variables through the concepts ... 
How does correlation affect the stock market?
Learn about the role correlation plays in prudent stock market investing, and how the correlation coefficient is used to ... 
What is the correlation between American stock prices and the value of the U.S. dollar?
The correlation between any two variables (or sets of variables) summarizes a relationship, whether or not there is any realworld ... 
How do I calculate correlation between market indicators and specific stocks?
Discover how to calculate the correlation coefficient between market indicators and stock prices, a critical skill in technical ...

Pearson Coefficient
A type of correlation coefficient that represents the relationship ... 
Berry Ratio
The ratio of a company's gross profits to operating expenses. ... 
Coefficient of Determination
A measure used in statistical model analysis to assess how well ... 
Coefficient Of Variation  CV
A statistical measure of the dispersion of data points in a data ... 
Information Coefficient  IC
A correlation value that measures the relationship between a ... 
Correlation Coefficient
A measure that determines the degree to which two variable's ...