CFA Practice Question

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CFA Practice Question

If SSR is equal to the sum of squares total, it means:
A. all the points lie on the regression line.
B. the coefficient of determination is zero.
C. the regression model is perfect.
Explanation: Yes the model captures all the observed variability.

Note about A: if all the points lie on the regression line, the dependent variable can be predicted with 100% accuracy by using the regression line, and SSE will be zero. However, the opposite is not necessarily true.

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