Week 8 – Regression Assumptions & Intermediate R

Question 1

What are some Regression Assumptions?

Answer 1

• Know what each looks like
• Know what a violation looks like
• Know the solutions to the assumption violation

Question 2

What is Linearity and how can you solve it?

Answer 2

Solution: transformation

Question 3

What is Multi-collinearity and how can you solve for it?

Answer 3

Solution: Combine variables or drop one

Question 4

What is Heteroscedasticity and how can you solve for it?

Answer 4

Solution: transformation

Question 5

What is Serial correlation and how can you solve for it

Answer 5

Solution: Time series analysis

Question 6

What are Outliers and how can you solve for them?

Answer 6

Solution: drop outliers

Question 7

What is Benford’s Law?

Answer 7

in financial data, small digits appear more often than larger digits at the beginning of a number.

Question 8

What are Decision trees?

Answer 8

• Decision trees identify which variables are most important for making decisions or predictions.
• The technique removes noise (entropy) and identifies which variables contribute the most information.
The result is a set of rules that can assist in decision making.