Results of a study reported in Financial Analysts Journal include a sime linear

Question

Results of a study reported in Financial Analysts Journal include a sime linear regression analysis of firms' pension funding(Y) versus profitability(X). The regression coefficient of determination is reported to be r^2=0.02.(The sample size used is 515).

a)Would you use the regression model to predict a firms pension funding?

b)Does the model explain much of the variation in firms' pension funding on the basis of profitability/

c Do you believe these regression results are worth reporting?Explain

Explanation / Answer

R^2=0.02 meaning very very correlation between the two variables.

a)A regression model will be of no use and it will not be able to predict.

b)The model explains only 2% of the variation and hence the model is not worthy.

c)The results are not worthy reporting.

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