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Basic Question 3 of 3
Which of the following statements is (are) true with respect to the economic interpretations of regression results?
II. The greater the number of independent variables that are added to a regression model, the stronger will be the predictive power of the model.
III. The calculation of the standard error of estimate allows for the calculation of a range of possible values for the dependent variable, which is more meaningful than an absolute value.
IV. If the standard errors are underestimated in a model, then the regression coefficients may be portrayed as more significant than they really are.
I. As long as a regression model has a fairly high degree of coefficient of determination, the results should not be disputed.
II. The greater the number of independent variables that are added to a regression model, the stronger will be the predictive power of the model.
III. The calculation of the standard error of estimate allows for the calculation of a range of possible values for the dependent variable, which is more meaningful than an absolute value.
IV. If the standard errors are underestimated in a model, then the regression coefficients may be portrayed as more significant than they really are.
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Learning Outcome Statements
formulate a multiple linear regression model, describe the relation between the dependent variable and several independent variables, and interpret estimated regression coefficients;
CFA® 2026 Level II Curriculum, Volume 1, Module 1.