- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 4. Introduction to Linear Regression
- Subject 3. The standard error of estimate and the coefficient of determination

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**CFA Practice Question**

If the coefficient of correlation equals 0.61, it indicates that the proportion of the variation in the dependent variable explained by the variation in the independent variable is

A. 37%

B. 61%

C. 98%

**Explanation:**0.61 x 0.61 = 37%.

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**User Contributed Comments**
3

User |
Comment |
---|---|

shiva5555 |
wtf? is the coefficient already squared? |

MathewBinu |
In models with one only indepedent variable, the coeffiecent of determination(R^2) can be calculated simply as equals r^2 (correlation coefficent. The question is the definition of R^2. |

jonan616 |
coefficient of correlation = r coefficient of determination = r^2 |