Which of the Following Statements Is True

question 17

Multiple Choice

Which of the following statements is true?

• A) The method used in regression analysis for incorporating a categorical variable into the model is by organizing the categorical variable into one or more indicator variables.
• B) An indicator variable is a dependent variable whose value is set at either zero or one.
• C) There are four possible responses listed for marital status. Based on this, four indicator variables will need to be created and incorporated into the regression model.
• D) On a survey there is a question that asks whether someone lives in a house, apartment, or condominium. These three responses could be coded in an indicator variable using values of 0, 1, and 2.
• E) All of the above are correct.

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Definitions:

Annual Coupon Bonds

Bonds that pay interest to the holder on an annual basis, where the interest rate is specified as a percentage of the bond's face value.

Interest Rates

Interest rates represent the cost of borrowing money, expressed as a percentage of the loan amount, paid by the borrower to the lender for the use of funds.