Consider the Model Y = β₀ + β₁x + β₂d

question 82

Multiple Choice

Consider the model y = β₀ + β₁x + β₂d + ε, where x is a quantitative variable and d is a dummy variable. When d = 0, the predicted value of y is ________.

• A) = b₀+ b₁x + b₂d
• B) = b₀ + b₁x
• C) = b₀ + b₂d
• D) = b₀ + b₁(x + d)

---

Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them.

Common Stock

Equities representing ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Equity Method

An accounting technique used to record investments in other companies, where the investment's value is adjusted to reflect the investor's share of the company's post-acquisition earnings or losses.