If the Variance Inflation Factor Exceeds _______, Enough Correlation Exists

question 93

Multiple Choice

If the variance inflation factor exceeds _______, enough correlation exists between the independent variables to claim that multicollinearity is present in the regression model.

• A)3.0
• B)10.0
• C)6.0
• D)5.0

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Definitions:

Underlying Stock Price

The current market price of the stock that is the subject of a call or put option.

Call Option Contract

A financial contract that gives the holder the right, but not the obligation, to buy a stated amount of a security at a predetermined price within a specific time period.

Put Option

An agreement that grants the holder the option to sell a predetermined quantity of a basic asset at an agreed price during a defined period, without being obligated to do so.

Risk-Free Asset

An investment security that is guaranteed to return its full investment value (e.g., U.S. Treasury securities).