Which Statement Is Incorrect

question 121

Multiple Choice

Which statement is incorrect?

• A)Binary predictors shift the intercept of the fitted regression.
• B)If a qualitative variable has c categories, we would use only c - 1 binaries as predictors.
• C)A binary predictor has the same t test as any other predictor.
• D)If there is a binary predictor (X = 0, 1) in the model, the residuals may not sum to zero.

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Definitions:

Cost of Capital

The rate of return that a company must pay on its investment and financing activities to maintain its current market value.

Cash Inflows

Money received by a business or organization through its activities, such as sales revenue, investment income, or financing.

Profitability Index

A ratio that calculates the relative profitability of an investment by dividing the present value of future expected cash flows by the initial investment cost.

Initial Investment

The amount of money used to start a project, investment, or business.