Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Multicollinearity
As the degree of correlation between the independent variables increases, the regression coefficients become less reliable. That is, although the independent variables may together explain the dependent variable, but because of multicollinearity the coefficients of the explanatory variables may be rejected. It can happen that the model may be accepted (through ANOVA and the F test), but the individual coefficients may be rejected (through the t test). This is because the interplay among the independent variables reduces the influence of the individual variables in the model. In the extreme case, if two variables are identical, then the influence of each one in the model would be reduced. Multicollinearity does not reduce the accuracy of the model (the predictive powers), but it hurts any sensitivity analysis - if we increase one explanatory variable by one unit, what happens?
This is a subject in itself, but the reader should be aware of the importance of multicollinearity.
Multiple Correlation Coefficients
So far we have come across correlation coefficients between two variables X and Y. However in the case of a multiple regression equation like
Y = a + b1 X1 + b2 X2
we see that Y can be correlated to both X1 and X2. Hence we can have a coefficient of multiple correlation which will measure the correlation between Y and both X1 and X2.
You have $20 to spend on high quality pens and low quality pens. High quality pens cost $5 each and low quality pens cost $2 each. (a) Suppose that you will spend your entire
Break Even Period: It is also important to compare the returns from the equity stock and the bond to determine the profitability of both investments. Assume that the dividend p
Identify and explain the key stages in the capital investment decision-making process and the role of investment appraisal in this process.
Q. Importance of Capital Budgeting Decision? 1. Such Decision affect the profitability of the Firm: - Capital Budgeting decision influences the long-term profitability of a fir
Secondary Market The secondary market is also referred to as the stock market where dealings in shares are taken up. It helps the shareholders to find buyers for trading. Thus,
What is an agent? What are the responsibilities of an agent? An agent is a person who has the actual or implied authority to act on behalf of another. The owners whom the agen
Big Joe's is changing a piece of equipment. The equipment will cost $5,000 and has a 5 year life. The equipment can be leased for annual payment of $1,295 paid at the starting of
Categorization of management risk: Once each event has been evaluated, and been classified as to its probability and impact, the next step is to categorise those events. To do
Divestment of company re-organisations Adisinvestment or divestment is selling part of the business or subsidiary to another third party. Reasons and features for divestme
Illustration An investor with a 1-year investment horizon purchases a 20-year 5% corporate bond. The prevailing price of the bond is Rs.82.3488 for a yield of 6.2%
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd