Variance in Dependent Variable Not Explained by Regression | CFA Level 1 Exam Prep

Percentage of Variance Not Explained

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Question

The results of the regressions using 200 observation on a variable Y against X are as follows:

Coefficient Standard error -

intercept 3.62.1

slope 8.11.3

R square = 49%

The percentage of variance in the dependent variable not explained by the regression equals ________.

Answers

Explanations

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A. B. C. D.

D

The R-square of the regression measures the amount of variance of the dependent variable explained by the independent variable. This is given to be 49%.

Hence, the amount not explained equals 100% - 49% = 51%.