Increase and decrease of r-squared

Reference no: EM13101281

In a regression analysis, if a new independent variable is added and R-squared increases and adjusted R-squared decreases precipitously, what can be concluded?

(a) The new independent variable improves the predictive power of the regression model.

(b)The new independent variable does not improve the predictive power of the regression model.

(c) The regression was performed incorrectly. It is impossible for R-squared to increase and adjusted R-squared decrease simultaneously.

(d) The new independent variable's coefficient is not significant at the 0.01 level.

Reference no: EM13101281

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