Using the Studentized Residuals Ti to Determine Influential Points in a Multiple

question 36

Multiple Choice

Using the Studentized residuals ti to determine influential points in a multiple regression model with k independent variable and n observations and letting tn-k-2 denote the upper critical value of a two-tail t test with a 0.10 level of significance, Xi is an influential point if

• A)\(| t | < t _ { n - k - 1 }\)
• B)\(| t | > t _ { n - k - 1 }\)
• C)\(\left| t _ { i } \right| < t _ { n - k - 2 }\)
• D)\(\left| t _ { i } \right| > t _ { n - k - 2 }\)

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Definitions:

Cost of Retained Earnings

The rate of return that shareholders expect on the earnings that a company keeps and reinvests in its operations.

Risk Premium

The extra return expected by an investor for holding a risky asset rather than a risk-free asset.

Flotation Costs

The costs incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Equity Capital

Funds raised by a company in exchange for shares of ownership in the company.