Which of the Following Statements Is True of Stepwise Regression

question 3

Multiple Choice

Which of the following statements is true of stepwise regression?

• A)In a stepwise regression, the dependent variable is regressed on each independent variable individually with an attempt to understand the effect of each independent variable on the dependent variable.
• B)In a stepwise regression, the dependent variable is regressed on different combinations of the independent variable with an attempt to come up with the best model.
• C)In a stepwise regression, the dependent variable can take up binary values only while the explanatory variables can take up quantitative values.
• D)In a stepwise regression, the dependent variable can take up quantitative values while the explanatory variables can take up only binary values.

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Definitions:

Internal Rate

Often referring to the Internal Rate of Return (IRR), it's the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Outlay

The amount of money spent on a particular expense or investment.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.