The Editors of a National Automotive Magazine Recently Studied 30

question 20

Multiple Choice

The editors of a national automotive magazine recently studied 30 different automobiles sold in the Canada with the intent of seeing whether they could develop a multiple regression model to explain the variation in highway fuel consumption. A number of different independent variables were collected. Included in these were two variables described as follows: If these two variables are to be included in a regression model, how many additional indicator variables will be needed?

• A) 6
• B) 8
• C) 2
• D) 4
• E) 5

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Definitions:

Financial Engineering

The use of mathematical techniques to solve financial problems, including designing new financial products and strategies.

Securities

Securities that signify ownership stakes in companies (equities), lending agreements with governments or businesses (bonds), or entitlements to ownership through options.

Financial Processes

The methods and procedures used by a company to manage its financial activities, such as budgeting, accounting, and investment management.

Capital

Refers to the financial resources available for use in the production of goods or the provision of services.