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    Question

    Which of the following is not correct regarding

    adjusted R2?
    A Adjusted R2 will always be more than or equal to R2 Correct Answer Incorrect Answer
    B Adding more useless explanatory variables will increase adjusted R2 Correct Answer Incorrect Answer
    C Adjusted R2 will always be less than or equal to R2 Correct Answer Incorrect Answer
    D Both a) and b) Correct Answer Incorrect Answer

    Solution

    R-squared measures the proportion of the variation in your dependent variable (Y) explained by your independent variables (X) for a linear regression model. Adjusted R-squared adjusts the statistic based on the number of independent variables in the model. R2 shows how well terms (data points) fit a curve or line. Adjusted R2 also indicates how well terms fit a curve or line, but adjusts for the number of terms in a model. If you add more and more useless variables to a model, adjusted r-squared will decrease. If you add more useful variables, adjusted r-squared will increase. Adjusted R2 will always be less than or equal to R 2. You only need R2 when working with samples. In other words, R2 isn't necessary when you have data from an entire population.

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