In Regression Analysis, If the Coefficient of Determination Is 1

question 47

Multiple Choice

In regression analysis, if the coefficient of determination is 1.0, then:

• A) the sum of squares for error must be 1.0
• B) the sum of squares for regression must be 1.0
• C) the sum of squares for error must be 0.0
• D) the sum of squares for regression must be 0.0
• E) all of these

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Definitions:

Unique Risk

Risk that is specific to a single asset or to a small group of assets, also known as unsystematic risk.

Unique Risk

Also known as unsystematic risk, it refers to the risk associated with a specific company or industry.

Diversifiable Risk

The portion of an investment's risk that can be reduced or eliminated through the practice of diversifying one's investment portfolio across various assets.

Systematic Risk

The inherent risk affecting the overall market or a particular sector, which cannot be eliminated through diversification.