What Is the Purpose of an Indicator Variable in a Regression

question 12

Multiple Choice

What is the purpose of an indicator variable in a regression model?

• A)An indicator variable allows us to increase our R-squared value.
• B)An indicator variable allows us to include quantitative variables in our model.
• C)An indicator variable allows us to fix violations of our constant variance assumption.
• D)An indicator variable allows us to fix violations of our normality assumption.
• E)An indicator variable allows us to include categorical variables in our model.

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Definitions:

Board of Directors

A body of persons chosen by stockholders to supervise and make critical decisions concerning the company's administration.

Shareholders

Individuals or entities that own shares in a corporation, giving them rights to dividends and a say in corporate affairs.

Board of Directors

A group of individuals elected to represent shareholders and make governing decisions on behalf of a corporation.

Enforcement Rights

The legal ability to ensure compliance or to compel individuals or entities to adhere to agreed terms, laws, or obligations.