FRM-regression Analysis
Finance Junkie
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FRM-regression Analysis

Postby » Sun Mar 24, 2013 1:59 pm

A variable is regressed against three other variables, x, y, and z. Which of the following would NOT be an indication of multicollinearity? X is closely related to:

A) 3y + 2z.
B) 3.
C) y2.
D) 9y, and x is closely related to 4z.

Can you please explain the ans

Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

FRM-regression Analysis

Postby content.pristine » Mon Mar 25, 2013 1:55 pm

B. 3
Reason being, if the independent variables (x,y,z) are dependent on each other, or any linear combination of each other, multicollinearity is a concern.

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