Reading 11- LOS F (Part 2): Q12 class, 2008, following, reports

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12.ch of the following reports the CORRECT value and interpretation of the R² for this regression? The R² is:

A)   0.6053 indicating that the variability of advertising expenditure explains about 60.53% of the variability in aggregate revenue.

B)   0.3947 indicating that the variability of advertising expenditure explains about 39.47% percent of the variability of aggregate revenue.

C)   0.6053 indicating that the variability of aggregate revenue explains about 60.53% of the variability in advertising expenditure.

D)   0.3947 indicating that the variability of aggregate revenue explains about 39.47% percent of the variability of advertising expenditure.

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The correct answer was A)

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

The interpretation of this R² is that 60.53% of the variation in aggregate revenue (Y) is explained by the variation in advertising expenditure (X).