A Dummy Variable Is Used as an Independent Variable in a Regression

question 3

Multiple Choice

A dummy variable is used as an independent variable in a regression model when:

• A)the variable involved is interval.
• B)the variable involved is nominal.
• C)a curvilinear relationship is suspected.
• D)two independent variables interact.

---

Definitions:

S&P 500 Index

A market-capitalization-weighted index of 500 of the largest publicly traded companies in the U.S.

Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specific quantity of an underlying asset at a set price within a specified time.

American Call-Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other instruments at a specified price within a specific time period.

Dividend-Payout Policies

Strategies adopted by companies to decide the size and pattern of cash dividends to shareholders.