Reading 11- LOS A (Part 2): Q9 about, against

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9.The Y variable is regressed against the X variable resulting in a regression line that is flat with the plot of the paired observations widely dispersed about the regression line. Based on this information, which statement is most accurate?

A)   X is perfectly positively correlated to Y.

B)   X is perfectly negatively correlated to Y.

C)   The R² of this regression is close to 100%.

D)   The correlation between X and Y is close to zero.

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The correct answer was D)

Perfect correlation means that the observations fall on the regression line. + means the line is going up and – means it is pointed down. An R² of 100%, means perfect correlation. When there is no correlation, the regression line is flat and the residual standard error equals the standard deviation of Y.