CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

An analyst is reviewing the following data produced after a regression analysis:

Total Sum of Squares (TSS) = 476

Sum of the Squares of the Errors (SSE) = 39
Regression Sum of the Squares (RSS) = 437
Sample data included 25 observations.

Using the analysis of variance (ANOVA) approach, which of the following statements would be true?

A. 91.1% of the variation in the dependent variable may be explained by the regression model.
B. 91.8% of the variation in the dependent variable may be explained by the regression model.
C. 95.8% of the variation in the dependent variable may be explained by the regression model.
Correct Answer: B

Coefficient of Determination: R2yx = RSS/TSS or 1 - SSE/TSS = 437/476 or 1 - 39/476 = 0.918.

91.8% of the variation in the dependent variable may be explained by the regression model.

User Contributed Comments 1

User Comment
quanttrader RSS = explained variation

SSE = unexplained variation
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