If the Coefficient of Determination Is 0

question 2

Multiple Choice

If the coefficient of determination is 0.94, what can we say about the relationship between two variables?

• A) The strength of the relationship is 0.94.
• B) The direction of the relationship is positive.
• C) 94% of the total variation of the dependent variable is explained by the independent variable.
• D) The direction of the relationship is negative.

---

Definitions:

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is available to cover variable costs and contribute to fixed costs and profits.

Fixed Monthly Expenses

Regular expenses that do not vary in amount and occur every month, such as rent or mortgage payments.

Net Operating Income

A company's operating profit after subtracting operating expenses from revenue, excluding non-operating activities like taxes and interest.

Break-even Point

The financial analysis point at which total revenues equal total costs, resulting in no profit or loss.