What Is the Measurement of Explained Variation

question 29

Multiple Choice

What is the measurement of explained variation?

• A) Coefficient of multiple determination
• B) Coefficient of multiple nondetermination
• C) Regression coefficient
• D) Correlation matrix
• E) None of these statements are correct

---

Definitions:

M&M Proposition II

A theory proposing that the cost of equity for a leveraged firm increases linearly with its level of debt, holding the cost of debt constant.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and is used in calculating the weighted average cost of capital.

Debt/Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, often used to gauge financial health and risk.

Required Rate of Return

The lowest yearly percentage gain from an investment required to attract individuals or businesses to invest in a specific security or venture.