Coefficient of determination, Financial Management

Coefficient of Determination

As before,

2081_coefficient of determination.png

Where,

2095_coefficient of determination1.png

We can show that TSS = RSS + ESS

We can also show that

F

= 1248_coefficient of determination2.png

is an F distribution with k degrees of freedom in the numerator and n - (k + 1) degrees of freedom in the denominator.

Let us look at two extreme cases

  1. The model is perfect.

        This implies that ESS = 0 and F = ∞

  1. The model does not exist.

         This implies that RSS = 0 and F = 0

Intuitively, it should then be clear that if F is too small, the model should be rejected.

Posted Date: 9/17/2012 2:06:18 AM | Location : United States







Related Discussions:- Coefficient of determination, Assignment Help, Ask Question on Coefficient of determination, Get Answer, Expert's Help, Coefficient of determination Discussions

Write discussion on Coefficient of determination
Your posts are moderated
Related Questions
Market mechanism: Market mechanism is a term from economics denoting to the use of money exchanged by sellers and buyers with an open and understood system of time and value t

Active Portfolio Strategy: An active portfolio strategy is tracked by most aggressive investors and investment professionals who strive to make superior returns, after adjustm

Deficiency in Design - This exists when a control essential to meet the control objective is missing or an existing control isn't properly designed so that even if control operates

What is the rational for having different types of security

I need a report on the topic Inventory Turnover Ratio. Can you please assist me for Inventory Turnover Ratio report for about 2500 words?

Reasons for Growth of Hedge Funds Many Hedge Fund strategies have the ability to generate positive returns in both rising and falling equity and bond markets. Inclusion of Hedg

An asset-backed security is a type of bond or note that is based on a pool of assets, or collateralized by the cash flows from a specified pool of underlying assets. As

What is Net Present Value? Describe please.

What are the basic requirements for a successful JIT inventory control system? For a JIT system to be booming the supplier must be willing and capable to deliver materials instan

Crown casino recently announced its intention to build a new 500-room luxury hotel in Perth costing approximately $568 million. As part of the agreement, the WA government has agre