2024 CFA Level I Exam: CFA Discussion Topic: Adjusted R^2

Author	Topic: Adjusted R^2
yfmoan @2005-04-01 18:24:17	Is it always true that R^2adj<1? Is it always true that R^2adj>0? Give reasons
busquelo @2005-04-06 09:44:31	You got it . Adjusted always smaller than non-adjusted when doing multiple regression analysis. Mathematically, 1-[(n-1)/(n-k-1)*(1-R^2)] so as you pile on independent variables, you are multiplying the quantity (1-R^2) by a bigger ratio, so subtracting that from one becomes a smaller number, it has to.
yfmoan @2005-04-07 08:54:46	isn't it possible for adjusted r2 to be greater than unadjusted r2? I think the deal is that the vast majority of the time it will be lower but not always. You'd better check that. CAPM or Ted can correct me if I'm wrong about that I'm sure.

To post a new topic or reply to a topic, please log in or register for a free user account.

I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.