US CMA Part 1 · Chapter 6 · Question 16 of 22
For a regression model, the total sum of squares is 50,000 and the sum of squared errors (residual sum of squares) is 8,000. What is the coefficient of determination?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 0.84
Explanation
R-squared = 1 - SSE / SST = 1 - 8,000 / 50,000 = 1 - 0.16 = 0.84. So 84% of the variation in the dependent variable is explained by the model. 0.16 is the unexplained proportion, and 0.92 would be the correlation coefficient.
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