Reading 11- LOS F (Part 2): Q20 second, simple, following, statements

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20.Assume you perform two simple regressions. The first regression analysis has an R-squared of 0.80 and a beta coefficient of 0.10. The second regression analysis has an R-squared of 0.80 and a beta coefficient of 0.25. Which one of the following statements is most accurate?

A)   Results from the first analysis are more reliable than the second analysis.

B)   Results of the second analysis are more reliable than the first analysis.

C)   The influence on the dependent variable of a one-unit increase in the independent variable is the same in both analyses.

D)   Results from both analyses are equally reliable.

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The correct answer was D)

The coefficient of determination (R-squared) is the percentage of variation in the dependent variable explained by the variation in the independent variable. The R-squared (0.80) being identical between the first and second regressions means that 80 percent of the variability in the dependent variable is explained by variability in the independent variable for both regressions. This means that the first regression has the same explaining power as the second regression.