The Number of Dummy Variables to Be Added to the Regression

question 46

Multiple Choice

The number of dummy variables to be added to the regression equation when a categorical variable has k levels is equal to ________.

• A)1/ k - 1
• B)k - 1
• C)k²
• D)k/1

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Definitions:

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue by comparing sales with total assets.

Current Ratio

An indicator used to evaluate whether a business can meet its short-term financial liabilities, calculated through the division of its current assets by its current liabilities.

Return on Equity

A financial ratio measuring the profitability of a business in relation to the equity held by the shareholders.

Asset Turnover

A ratio determining the efficacy of a company's asset utilization in creating sales revenue.