Reading 11- LOS F (Part 2): Q11 revenue, between, following, class

cfaedu

11.ch of the following is the CORRECT value of the correlation coefficient between aggregate revenue and advertising expenditure?

A)   0.9500.

B)   0.3947.

C)   0.6053.

D)   0.7780.

cfaedu

The correct answer was D)

The R² = (SST - SSE)/SST = RSS/SST = (20,922.5 - 8,257.374) / 20,922.5 = 0.6053.

The correlation coefficient is the square root of the R² in a simple linear regression which is the square root of 0.6053 = 0.7780.