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Reading 12: Multiple Regression and Issues in Regression A

Q38. What percent of the variability in the dependent variable is explained by the independent variable?

A)   40.73%.

B)   56.00%.

C)   12.68%.

Q39. The model indicates that at the 5% level of significance:

A)   the slopes are not significant but the constant is.

B)   the slopes are significant but the constant is not.

C)   the slopes and the constant are statistically significant.

Q40 . When a number of independent variables in a multiple regression are highly correlated with each other, the problem is called:

A)   multicollinearity.

B)   autocorrelation.

C)   heteroskedasticity.

Q41. In a recent analysis of salaries (in $1,000) of financial analysts, a regression of salaries on education, experience, and gender is run. Gender equals one for men and zero for women. The regression results from a sample of 230 financial analysts are presented below, with t-statistics in parenthesis.

Salaries = 34.98 + 1.2 Education + 0.5 Experience + 6.3 Gender

                (29.11)          (8.93)                (2.98)                (1.58)

What is the expected salary (in $1,000) of a woman with 16 years of education and 10 years of experience?

A)   59.18.

B)   54.98.

C)   65.48.

Q42. Holding everything else constant, do men get paid more than women? Use a 5% level of significance. No, since the t-value:

A)   does not exceed the critical value of 1.96.

B)   does not exceed the critical value of 1.65.

C)   exceeds the critical value of 1.96.

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