Explanation:
R² is one of the most used and abused regression statistics. The only appropriate answer to the question is that R² is the proportion of variation in the dependent variable, the variable of interest that is explained by the regression.
(Book 2, Module 18.2, LO 18.b)
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Question 17
A portfolio strategist has been reading his firm's research reports related to local, regional, and national economic activities. The statistical technique underlying most of the analyses is regression. Having a background in liberal arts, though, his understanding of various regression analyses output is confounded by a plethora of numerical figures. The strategist asks his colleague to explain a figure referenced most frequently. Which of the following statements best describes the "coefficient of determination," or "R²" as it relates to regression results?
A
The R² provides a level of statistical significance generated by the regression analysis.
B
The R² provides a proportion of variation in the variable of interest that is explained by the regression.
C
The R² provides a level of prediction performance generated by the regression.
D
The R² provides a proportion of causation in the variable of interest that is caused by the regression.
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