Multicollinearity in a Regression Model Can Be Detected When

question 83

Multiple Choice

Multicollinearity in a regression model can be detected when

• A) two or more independent variables are highly correlated with each other.
• B) an independent variable known to be an important predictor ends up having a partial regression coefficient that is not significant.
• C) a partial regression coefficient that should be positive turns out to be negative,or vise versa.
• D) when an independent variable is added or removed ,the partial regression coefficients for the other independent variables change drastically.
• E) All of the above could be evidence that multicollinearity is present in the model.

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Definitions:

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest of previous periods, with the process happening every month.

Compounded Semi-annually

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods, applied twice a year.

Equivalent Cash

A term typically used to describe a sum of money that has the same value as another form of financial instrument or asset.

Compounded Semi-annually

Involves the calculation and addition of interest to the principal sum twice per year.