A Real Estate Builder Wishes to Determine How House Size

question 4

Multiple Choice

A real estate builder wishes to determine how house size (House) is influenced by family income (Income) ,family size (Size) ,and education of the head of household (School) .House size is measured in hundreds of square metres,income is measured in thousands of dollars,and education is in years.The builder randomly selected 50 families and developed a multiple regression model.The business literature involving human capital shows that education influences an individual's annual income.Combined,these may influence family size.With this in mind,what should the real estate builder be particularly concerned with when analysing the multiple regression model?

• A)Normality of residuals.
• B)Collinearity.
• C)Missing observations.
• D)Randomness of error terms.

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Definitions:

Incentive Bonus

Additional compensation awarded to employees as a means to stimulate performance or achieve specified goals.

Black-Scholes Value

A theoretical value of an option derived using the Black-Scholes model, which estimates the price of options based on factors such as volatility and time to expiration.

Management Incentive Fee

A fee paid to fund managers for achieving performance targets, often a percentage of the investment gains.

Standard Deviation

A measure of the dispersion or variation in a set of data points, often used in finance to quantify the risk of an investment.