If Given a Choice in Collecting Data on Age for Use

question 139

True/False

If given a choice in collecting data on age for use as an independent variable in a regression model, a decision maker would generally prefer to record the actual age rather than an age category so as to avoid using dummy variables.

---

Definitions:

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, typically represented by government bonds.

Market Risk Premium

The surplus earnings expected by investors for possessing a market portfolio with risks as opposed to secure, riskless assets.

CAPM

Capital Asset Pricing Model, a formula that describes the relationship between the expected return of an investment and its risk.

Marginal Cost

The cost incurred by producing one additional unit of a product or service, critical for pricing and production decisions.