Question

what does the adjusted r squared tell us about the relationship between sales, price, and advertising? the model explains about 90% of the variance in sales. the model explains about 60% of the variance in sales. the model explains about 80% of the variance in sales. the model explains about 70% of the variance in sales.

Answer 1

The modified r squared tells us more about the relationship among sales, price, as well as advertising by explaining approximately 60% of a variance in sales.

Define the term adjusted r squared?

R-squared (R2) would be a statistical measure that quantifies the proportion of the variation explained from an independent variable other variables within a regression model for a dependent variable.

• R-squared describes how much the variance with one variable describes the variance of the other.
• So, if a model's R2 is 0.50, the model's inputs can explain roughly half of a observed variation.
• A score of 70 to 100 shows that a specific portfolio closely reflects the underlying stock index, whereas a score of 0 to 40 indicates a relatively poor correlation the with index.
• Higher R-squared scores also suggest that beta measurements are more reliable. The volatility of either a security or portfolio is measured by beta.

Thus, the modified r squared tells us more about the relationship among sales, price, as well as advertising by explaining approximately 60% of a variance in sales.

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