Question

The R2 statistic tells us how well the variation in the company's valuation of jobs based on job evaluation points explains the variation in market pay rates from the compensation survey. What does it mean when the R2 = 1?

Answer 1

A. All of the variation in market pay can be explained by the company's job structure.

Step-by-step explanation:

If the R2 statistics is equals to 1, it means that 100% of the variation in the market pay is explained by the company's job structure. R2 statistics which is the R squared value shows the degree to which variance in the dependent variable is explained by the independent variable. It is also called coefficient of determination. 100% of 1 value indicates that the model used explains ALL the variability of the dependent data around its mean. With 0% or 0 implying the oppisite.