What Is the Correct Range for R² Values

question 29

Multiple Choice

What is the correct range for R² values?

• A) (−1 ≤ R² ≤ 0)
• B) (−1 ≤ R² ≤ 1)
• C) (0 ≤ R² ≤ 1)
• D) (0 ≤ R² ≤ .5)

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Definitions:

One-Factor APT

A financial model that describes the relationship between a security's returns and a single factor affecting all securities, used to predict performance.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, typically represented by government bonds of a stable country.

Diversified Portfolios

A strategy that mixes a wide variety of investments within a portfolio to minimize risks.

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An increase in the production of goods and services in an economy over a period of time, typically measured by GDP.