If an Additional Explanatory Variable Was Added to the Model

question 18

Multiple Choice

If an additional explanatory variable was added to the model, what would happen to R2?

• A) It would stay the same or increase.
• B) It would always increase.
• C) It would decrease.
• D) It would stay the same or decrease.
• E) The effect cannot be determined from this information.

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Definitions:

Revalued Upward

Revalued upward is a term used in accounting to indicate an increase in the book value of an asset to reflect its current market value.

Subsequent Depreciation

The allocation of an asset's cost over its useful life, considering any adjustments made following the asset's initial measurement and recognition.

Revaluation Method

A method used to adjust the carrying value of an asset to its current market value on the balance sheet.

IFRS

The International Financial Reporting Standards (IFRS) provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.