How Does Including an Irrelevant Variable in a Regression Model

question 17

Multiple Choice

How does including an irrelevant variable in a regression model affect the estimated coefficient of other variables in the model?

• A)they are biased downward and have smaller standard errors
• B)they are biased upward and have larger standard errors
• C)they are biased and the bias can be negative or positive
• D)they are unbiased but have larger standard errors

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Definitions:

Consolidation

The process of combining multiple entities, assets, or financial statements into a single entity or set of financial statements.

Acquisition

The process by which one company takes over controlling interest in another company, which may involve purchasing assets or a majority of its stock.

Consolidation

The process of combining multiple entities or accounts into one, often for financial reporting or to create a larger, more competitive entity.

Merger

The combination of two or more companies into one, where one corporation is completely absorbed by another corporation.