A Researcher Wants to Address Multicollinearity Using the Guideline That

question 57

Multiple Choice

A researcher wants to address multicollinearity using the guideline that a variance inflation factor (VIF) greater than 9 will indicate a severe multicollinearity problem.This means that the highest coefficient of determination allowed will be ______.

• A) 0.900
• B) 0.912
• C) 0.928
• D) 0.935
• E) 0.939

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Definitions:

ROA

Return on Assets; a financial ratio indicating how profitable a company is relative to its total assets.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.

Times-Interest-Earned Ratio

This financial metric measures a company's ability to meet its debt obligations based on its current income, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

Net Increase

The difference between the current period's value and the previous period's value when the current period's value is greater than the previous one.