If a Group of Independent Variables Are Not Significant Individually

question 3

Multiple Choice

If a group of independent variables are not significant individually but are significant as a group at a specified level of significance,this is most likely due to

• A)autocorrelation.
• B)the presence of dummy variables.
• C)the absence of dummy variables.
• D)collinearity.

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Definitions:

Bond

A security issued by a borrower that obligates the issuer to make specified payments to the holder over a specific period. A coupon bond obligates the issuer to make interest payments called coupon payments over the life of the bond, then to repay the face value at maturity.

Standard Deviation

A statistical measure of the dispersion or spread of a set of data points or investment returns around their mean.

Expected Return

The predicted amount of profit or loss an investment is expected to generate over a specific time period.

Probability Distribution

A mathematical formulation that presents all potential values and their chances for a random variable within a particular range.