Chapter 15

Question 1

Multiple regression model

Answer 1

The equation which describes how the dependent variable Y is related to the independents variables Xp and an error term

Question 2

Adjusted R2

Answer 2

R2 —> SSR/SST and the Adj R2 —>1-(1-R2) n-1/n-p-1

Question 3

F-test multiple regression

Answer 3

Is used to determine whether a significant relationship exist between the dependent variable and the set of ALL independent variables - test for overall significance

Question 4

T-test multiple regression

Answer 4

Is used to determine whether each of the individual independent variables is significant. A separate t-test is conducted for each of the independent variables in the model - test for individual significance

Question 5

Multicollineraity

Answer 5

Refers to the correlation between the independent variables.

Question 6

Dummy variable

Answer 6

Is what a X-variable is called when using qualitative independent variables which only take on values 0 or 1. Ex 0 stands for men and 1 stands for women, depending on gender we get b-parameter multiplied with 1 or 0

Question 7

Logistic regression

Answer 7

Is used when the dependent variable Y can assume two values, 0 or 1. With logistic regression can we calculate the probability of getting Y=0 and Y=1