FRM-regression Analysis
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FRM-regression Analysis

Postby » Sun Mar 24, 2013 2:01 pm

Which of the following statements regarding multicollinearity is FALSE?

A) Multicollinearity may be present in any regression model.
B) Multicollinearity may be a problem even if the multicollinearity is not perfect.
C) Multicollinearity makes it difficult to determine the contribution to explanation of the dependent variable of an individual explanatory variable.
D) If the t-statistics for the individual independent variables are insignificant, yet the F-statistic is significant, this indicates the presence of multicollinearity.

If ans is A. why so

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FRM-regression Analysis

Postby content.pristine » Mon Mar 25, 2013 1:06 pm

A. In situations, where there is only one independent variable explaining one dependent variable, there is no multicollinearity. Multicollinearity only arises when there are two or more independent variables that are not independent of each other.

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