Gramling Business Analytics Practice Exam 2026 – Complete Prep Resource

R², or the coefficient of determination, is a crucial statistic in regression analysis because it provides insight into the proportion of variance in the dependent variable that can be predicted from the independent variables. This means that R² quantifies how well the regression model fits the data by indicating the extent to which changes in the independent variable(s) account for the variability observed in the dependent variable.

A higher R² value, which ranges from 0 to 1, signifies that a larger proportion of variance is explained by the model, suggesting a better fit. For instance, an R² of 0.75 indicates that 75% of the variability in the dependent variable can be predicted from the independent variable(s), while the remaining 25% of the variance is due to other factors or inherent variability in the data.

In contrast, the other choices do not accurately describe the role of R² in regression analysis. While correlation measures the linear relationship between two variables, it does not reflect the proportion of explained variance. The mean of the dataset is a basic statistical measure that describes the average value, and the number of observations pertains to sample size, neither of which are directly related to what R² aims to convey in the context of regression analysis. Thus, the