The R² of a Multiple Regression of Y on X₁

question 14

Multiple Choice

The R² of a multiple regression of y on x₁ and x₂ measures the ________.

• A) percentage of the variation in y that is explained by the variability of x 1
• B) percentage of the variation in y that is explained by the variability of x 2
• C) statistical significance of the coefficients in the sample regression equation
• D) percentage of the variation in y that is explained by the sample regression equation

---

Definitions:

Capital Budgeting Decisions

The process of making investment decisions in long-term assets and projects, based on their expected cash flows and potential for returns.

Cash Inflows

The total amount of money being received by a company from its various business activities, such as sales revenue, investments, and loans.

Cash Outflows

Cash outflows represent money leaving a business, covering expenses like payroll, rent, materials, and other operational costs, crucial for cash flow management.

Present Value

The current value of a future amount of money or stream of cash flows, discounted back to the present using a specific discount rate.