Coefficient of determination, Financial Management

Assignment Help:

Coefficient of Determination

As before,

2081_coefficient of determination.png

Where,

2095_coefficient of determination1.png

We can show that TSS = RSS + ESS

We can also show that

F

= 1248_coefficient of determination2.png

is an F distribution with k degrees of freedom in the numerator and n - (k + 1) degrees of freedom in the denominator.

Let us look at two extreme cases

  1. The model is perfect.

        This implies that ESS = 0 and F = ∞

  1. The model does not exist.

         This implies that RSS = 0 and F = 0

Intuitively, it should then be clear that if F is too small, the model should be rejected.


Related Discussions:- Coefficient of determination

What is indirect method, What is Indirect method Indirect method is wha...

What is Indirect method Indirect method is what you would probably be familiar with. It requires a lot less information to produce it and hence can be argued to be easier metho

Factors considered in assigning a credit rating, Credit rating agenci...

Credit rating agencies carry out credit rating. Companies appoint these agencies to assign credit rating for their corporate issues. The rating agencies may condu

Profit maximization-objectives of a business entity, Profit maximization ...

Profit maximization Traditionally, this was considered to be the major goal of the firm. Profit maximization refers to attaining the maximum possible profits throughout the yea

Strategic management, Develop and implement strategic plan using bounce fit...

Develop and implement strategic plan using bounce fitness as case study

Enumerate the field of study dealing with finance, Enumerate the field of s...

Enumerate the field of study dealing with finance The field of study dealing with finance was treated as encompassing three interrelated aspects of raising and administering re

Expalin u.s. dollar weakens in the foreign exchange market, What does it me...

What does it mean when the U.S. dollar weakens in the foreign exchange market? When the U.S. dollar decline in the foreign exchange market one U.S. dollar buys less units of an

Introduction to financial management, Introduction to financial management:...

Introduction to financial management: Meaning and defecation of the financial management Finance function Scope and content of financial function Functions and

Mass and batch production, a) IPod -Line / Mass production is most suitable...

a) IPod -Line / Mass production is most suitable given that Apple can sell the standardised product to mass markets across the world. Only small variations to the production proces

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd