When Using the T-Statistic in Multiple Regression to Determine If

question 43

Multiple Choice

When using the t-statistic in multiple regression to determine if a variable should be removed:

• A) R² will increase if the variable is removed.
• B) if |t| > 1, the standard error will decrease.
• C) a large number of independent variables is convenient.
• D) if |t| < 1, the standard error will increase.

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Definitions:

Fair Value

Fair value is the estimated market price of an asset or liability, reflecting the value for which it could be exchanged between willing and knowledgeable parties in an arm's length transaction.

Statement of Financial Position

Another term for the balance sheet, it shows the company's financial situation by detailing assets, liabilities, and equity at a certain point in time.

Statement of Comprehensive Income

A financial statement that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, incorporating both income statement and other comprehensive income.

Diversified

A risk management strategy that mixes a wide variety of investments within a portfolio.