If You Had a Two Regressor Regression Model, Then Omitting

question 48

Multiple Choice

If you had a two regressor regression model, then omitting one variable which is relevant

• A)will have no effect on the coefficient of the included variable if the correlation between the excluded and the included variable is negative.
• B)will always bias the coefficient of the included variable upwards.
• C)can result in a negative value for the coefficient of the included variable, even though the coefficient will have a significant positive effect on Y if the omitted
• Variable were included.
• D)makes the sum of the product between the included variable and the residuals different from 0.

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Definitions:

Discount Rate

An interest rate used to discount future cash flows to their present value, often central in determining the value of investments.

Trust Fund

A fund comprised of a variety of assets intended to provide benefits to an individual, group, or organization.

Annual Percentage Rate

A measure of the cost of credit, expressed as a yearly interest rate.

Annual Percentage Rate

The yearly interest rate charged on borrowed money, including fees and other costs associated with the loan.