The coefficient of determination (R-squared) measures:

A Causation

B The proportion of variation in the dependent variable explained by the independent variable(s)

C The slope only

D Standard error

✓ Correct Answer: Option B

R² ranges from 0 to 1. R² = 0.80 means 80% of dependent variable variation is explained by the model.

💡 Why is B) the correct answer?

The correct answer to the question "The coefficient of determination (R-squared) measures:" is Option B: The proportion of variation in the dependent variable explained by the independent variable(s).

The other options — A) Causation, C) The slope only, D) Standard error — are incorrect for this CFA Exam Prep question. As explained above: R² ranges from 0 to 1. R² = 0.80 means 80% of dependent variable variation is explained by the model.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Quantitative Methods topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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The coefficient of determination (R-squared) measures:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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