A regression analysis of company profits and the amount of money the company spent on advertising produced a $\mathrm { R } ^ { 2 } = .72$. Which of these is true?
I. This model can correctly predict the profit for $72 \%$ of companies.
II. $\quad 72 \%$ of the variance in company profit can be accounted for by the model.
III. On average, companies spend about $72 \%$ of their profits on advertising.
A) None
B) I only
C) II only
D) III only
E) I and III

Question

Quizplus · Accepted Answer

The $ R^2 $ value of 0.72 indicates that 72% of the variance in company profit can be explained by the model, which corresponds to statement II.

A Regression Analysis of Company Profits and the Amount of Money