Coefficient of determination, Financial Management

Coefficient of Determination

As before,

2081_coefficient of determination.png


2095_coefficient of determination1.png

We can show that TSS = RSS + ESS

We can also show that


= 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
Q. What is FV of a Single Present Cash Flow? the future value of a single cash flow is defined in term of equation as follows: FV = PV (1 + r)n Where, FV = Future value PV = Pr

Question: (a) What is a computer virus? List and explain the different type of computer viruses? (b) List 4 steps which you can use to minimize the chances of being infec

Dividend cover Dividend cover = Profit available to ordinary shareholders (PAT) / Annual dividend(no. of times) Or =    EPS/Dividend per share Dividend cover shows safety

Determine the example of Rate of return of a Bond A bond is paying 10 % interest per annum and is going to mature in next two years At maturity it would pay its principal amoun

Q. Explain about Cash Forecasting Method ? Under this method an approximate is made of cash receipts and payments for the next period. Estimated cash receipts are added to the

How can secondary market organised the exchanges and over the counter markets? Exchanges and over-the-counter (OTC) markets: Secondary markets can be organised by exchanges

How can we calculate ration analysis in financial management?? Determine the ration analysis? Need assignemt help on this topic

All treasury securities are issued on the basis of auction. The auction process is computerized and hence qualified broker-dealers can access it electronically. T

Q. Computation of the Value of the firm? The argument given by MM in favour of their hypothesis is that whatever increase in the value of the firm results from the payment of d

What is Net Present Value? Describe please.