With Enough Variables, It Is Possible to Get An $\mathrm { R } ^ { 2 }$

question 19

True/False

With enough variables, it is possible to get an $\mathrm { R } ^ { 2 }$ value close to 1, even if the variables have no particular
meaning in the model.

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Definitions:

EPS

Earnings Per Share, a financial metric indicating the portion of a company's profit allocated to each outstanding share of common stock.

Optimal Capital Structure

The best mix of debt, preferred stock, and common equity financing that maximizes a company's stock price while minimizing its cost of capital.

Earnings Per Share

A financial ratio indicating the amount of profit attributed to each outstanding share of common stock.

Cost of Equity

The return that investors expect for investing in a company's equity, usually considered in the form of dividends and share price appreciation.