Exhibit 14-6.A manager at a local bank analyzed the relationship between monthly salary (y,in $)and length of service (x,measured in months)for 30 employees.She estimates .The following table summarizes a portion of the regression results: Refer to Exhibit 14-6.How much of the variation in Salary is unexplained by the model?
A)1%
B)2%
C)18.39%
D)81.61%

Question

Exhibit 14-6.A manager at a local bank analyzed the relationship between monthly salary (y,in $)and length of service (x,measured in months)for 30 employees.She estimates  .The following table summarizes a portion of the regression results:  Refer to Exhibit 14-6.How much of the variation in Salary is unexplained by the model?
A)1% 
B)2% 
C)18.39% 
D)81.61%

Quizplus · Accepted Answer

The coefficient of determination (R-squared) is 0.1839 or 18.39%. This means that 81.61% of the variation in salary is unexplained by the model. The higher the R-squared value, the better the model fits the data, and vice versa.