In a Multiple Regression Model, Which of the Following Is

question 42

Multiple Choice

In a multiple regression model, which of the following is true?

• A) The coefficient of determination will be equal to the square of the highest correlation in the correlation matrix.
• B) Adding variables that have a low correlation with the dependent variable will cause the R-square value to decline.
• C) The sum of the residuals computed for the least squares regression equation will be zero.
• D) The adjusted R-square might be higher or lower than the value of the R-square.

---

Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, expressed in years.

Adjustable-Rate Mortgages

A type of mortgage in which the interest rate applied to the outstanding balance varies throughout the life of the loan.

Immunization

A strategy in bond portfolio management aimed at minimizing the impact of interest rate changes on the portfolio's value while ensuring that the portfolio meets future cash flow needs.

Asset Portfolio

A collection of various types of investments held by an individual or institution.