A researcher wants to examine how the remaining balance on $100,000 loans taken 10 to 20 years ago depends on whether the loan was a prime or subprime loan. He collected a sample of 25 prime loans and 25 subprime loans and recorded the data in the following variables:Balance = the remaining amount of loan to be paid off (in $),Time = the time elapsed from taking the loan,Prime = a dummy variable assuming 1 for prime loans, and 0 for subprime loans.The regression results obtained for the models:Model A: Balance = ?0 + ?1Prime + ?Model B: Balance = ?0 + ?1Time + ?2Prime + ?3Time × Prime + ?Model C: Balance = ?0 + ?1Prime + ?2Time × Prime + ?,are summarized in the following table.VariableModel AModel BModel CIntercept88,020 (t = 77.89)90,269
(t = 24.35)88,020 (t = 81.19)TimeN/A?148 (t = ?0.64)N/APrime?18,000 (t = ?11.26)-28,493 (t = ?5.36)?26,244 (t = ?6.66)Time × PrimeN/A662 (t = 2.03)514 (t = 2.27) SSE1,532,480,0001,369,126,0911,381,128,299R20.72540.75470.7526Adjusted R20.71980.73880.7421Note: The values of relevant test statistics are shown in parentheses below the estimated coefficients.Suppose that at a 10% significance level, you do not reject the null hypothesis, H0: ?1 = 0, when testing the individual significance of Time in Model B. Would you delete Time from Model B?
A. No, removing Time from Model B results in Model C which has a with lower R2.
B. No, Model B has the highest R2, so it should be used for making predictions.
C. Yes, Time should be deleted because we could not prove its significance even for ? = 0.10.
D. Yes, removing Time from Model B results in Model C which has a higher adjusted R2.
Answer: D
You might also like to view...
Marketing, finance, operations, and human resources are examples of what type of group?
a. functional b. cross-functional c. command d. task
Helena Corporation declared a 2-for-1 stock split on 8,000 shares of $6 par value common stock. If the market price of the stock had been $25 a share before the split, the par value, number of shares, and approximate market value after the split would be: Par ValueNo. of SharesMarket ValueA.$6.00 16,000 $12.50 B.$6.00 8,000 $25.00 C.$3.00 16,000 $12.50 D.$3.00 16,000 $25.00
A. Option A B. Option B C. Option C D. Option D
Unless a corporation violates a law, its actions do not raise questions about corporate ethics
Indicate whether the statement is true or false
In the United States, legislation and case law affect or control
a. who may work and what work may be done. b. when and where work may be done. c. how it may be done and what minimum wage must be paid. d. All of the above are affected or controlled.