Suppose You're Running a Multiple Regression of Home Prices (In

question 42

Multiple Choice

Suppose you're running a multiple regression of Home Prices (in thousands of $) on five different treatment variables including number of bedrooms, number of bathrooms, total square feet, total lot size, and garage size, where all the treatment variables have been standardized . If the coefficient on number of bedrooms is estimated to be 3, how would you interpret the coefficient on the number of bedrooms?

• A) Increasing the number of bedrooms by 1, holding number of bathrooms, total square feet, lot and garage size fixed increases the average home price by three thousand dollars.
• B) Increasing the number of bedrooms by 3, holding number of bathrooms, total square feet, lot and garage size fixed increases the average home price by a thousand dollars.
• C) Increasing the number of bedrooms by 1, increases the average home price by three thousand dollars.
• D) Increasing the number of bedrooms by 1 standard deviation, holding number of bathrooms, total square feet, lot and garage size fixed increases the average home price by three thousand dollars.

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Definitions:

Return on Assets

A financial ratio that indicates how profitable a company is relative to its total assets, measuring efficiency in using assets to generate earnings.

Annual Sales

The total revenue a company generates from its operations over the course of a single fiscal year.

Total Debt

The sum of all liabilities and obligations owed by an entity, both short-term and long-term.

Total Equity

The total net value of a company, calculated by subtracting total liabilities from total assets, representing the owners' claim on company assets.