Dropping Irrelevant Variables from a Regression Equation Might Provide a Better

question 16

Multiple Choice

Dropping irrelevant variables from a regression equation might provide a better regression in what sense?

• A) Only when the irrelevant variables are uncorrelated with the treatment(s).
• B) Might facilitate more efficient/precise estimates of the treatment effect (smaller standard errors).
• C) Only if the irrelevant variables have low p-values.
• D) Only if the irrelevant variables have many outliers.

---

Definitions:

Market Rate

The current price or cost of a good, service, or financial asset in the marketplace, determined by supply and demand dynamics.

Par Value

The nominal dollar amount assigned to a security by the issuer.

Semiannual Interest

Interest that is calculated and paid twice a year, often associated with bonds or loans.

Selling Price

The amount of money charged for a product or service, determined by various factors including cost, demand, and market conditions.