A regression analysis of company profits and the amount of money the company spent on
Advertising found r2 = 0.72 . Which of these is true?
I. This model can correctly predict the profit for 72% of companies.
II. On average, about 72% of a company's profit results from advertising.
III. On average, companies spend about 72% of their profits on advertising.
A) II only
B) I and III
C) none of these
D) III only
E) I only

Question

Quizplus · Accepted Answer

The r² value of 0.72 indicates that 72% of the variability in company profits can be explained by the amount spent on advertising, not that 72% of profits result from advertising or that 72% of profits are spent on advertising.

A Regression Analysis of Company Profits and the Amount of Money