Put the Following Steps of the Model-Building Process in the Order

question 28

Multiple Choice

Put the following steps of the model-building process in the order in which it would be statistically most appropriate to do them:
(I) Estimate model
(ii) Conduct hypothesis tests on coefficients
(iii) Remove irrelevant variables
(iv) Conduct diagnostic tests on the model residuals

• A) (i) then (ii) then (iii) then (iv)
• B) (i) then (iv) then (ii) then (iii)
• C) (i) then (iv) then (iii) then (ii)
• D) (i) then (iii) then (ii) then (iv).

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Definitions:

Risk Management

The process of identifying, assessing, and controlling threats to an organization's capital and earnings.

Project Risk

Any uncertain event or condition that, if it occurs, may have a positive or negative effect on a project's objectives.

Eliminating Risk

The process of removing potential threats or uncertainties that could negatively impact a project's objectives or outcomes.

Assessing Risk

The process of identifying and evaluating potential risks and their impact on a project, organizational objective, or activity.