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Reading 7 Introduction To Linear Regression

The documents contain 11 multiple choice questions about simple linear regression: 1) The questions cover topics like the meaning of slope coefficients, hypothesis testing using t-tables, the coefficient of determination, assumptions of linear regression, and interpreting regression output. 2) One question asks which choice is least likely an assumption of linear regression, with one answer being that error terms are positively correlated. 3) Another questions asks to calculate a predicted dependent variable value given the independent variable and regression equation.

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ARPIT ARYA
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57 views

Reading 7 Introduction To Linear Regression

The documents contain 11 multiple choice questions about simple linear regression: 1) The questions cover topics like the meaning of slope coefficients, hypothesis testing using t-tables, the coefficient of determination, assumptions of linear regression, and interpreting regression output. 2) One question asks which choice is least likely an assumption of linear regression, with one answer being that error terms are positively correlated. 3) Another questions asks to calculate a predicted dependent variable value given the independent variable and regression equation.

Uploaded by

ARPIT ARYA
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Question #1 of 11 Question ID: 1456690

The estimated slope coefficient in a simple linear regression is:

the predicted value of the dependent variable, given the actual value of the
A)
independent variable.
the change in the independent variable, given a one-unit change in the dependent
B)
variable.
the ratio of the covariance of the regression variables to the variance of the
C)
independent variable.

Question #2 of 11 Question ID: 1456696

Use the following t-table for this question:

Probability in Right Tail

df 5.0% 2.5% 1.0%

196 1.653 1.972 2.346

197 1.653 1.972 2.345

198 1.653 1.972 2.345

199 1.653 1.972 2.345

200 1.653 1.972 2.345

201 1.652 1.972 2.345

202 1.652 1.972 2.345

A sample of 200 monthly observations is used for a simple linear regression of returns
versus leverage. The resulting equation is:

returns = 0.04 + 0.894(Leverage) + ε

If the standard error of the estimated slope variable is 0.06, a test of the hypothesis that the
slope coefficient is greater than or equal to 1.0 with a significance of 5% should:
A) be rejected because the test statistic of –1.77 is less than the critical value.
B) be rejected because the test statistic of –1.77 is greater than the critical value.
C) not be rejected because the test statistic of –1.58 is not less than the critical value.

Question #3 of 11 Question ID: 1456692

The coefficient of determination for a linear regression is best described as the:

percentage of the variation in the dependent variable explained by the variation of


A)
the independent variable.
B) covariance of the independent and dependent variables.
percentage of the variation in the independent variable explained by the variation of
C)
the dependent variable.

Question #4 of 11 Question ID: 1456698

When there is a linear relationship between an independent variable and the relative change
in the dependent variable, the most appropriate model for a simple regression is:

A) the lin-log model.


B) the log-log model.
C) the log-lin model.

Question #5 of 11 Question ID: 1456694


Consider the following analysis of variance (ANOVA) table:

Source Sum of squares Degrees of freedom Mean sum of squares

Regression 550 1 550.000

Error 750 38 19.737

Total 1,300 39

The F-statistic for the test of the fit of the model is closest to:

A) 0.97.
B) 27.87.
C) 0.42.

Question #6 of 11 Question ID: 1456691

Which of the following is least likely an assumption of linear regression?

A) Values of the independent variable are not correlated with the error term.
B) The error terms from a regression are positively correlated.
C) The variance of the error terms each period remains the same.

Question #7 of 11 Question ID: 1456695

Consider the following analysis of variance (ANOVA) table:

Source Sum of squares Degrees of freedom Mean sum of squares

Regression 556 1 556

Error 679 50 13.5

Total 1,235 51

The R2 for this regression is closest to:

A) 0.55.
B) 0.45.
C) 0.82.

Question #8 of 11 Question ID: 1456689

In a simple regression model, the least squares criterion is to minimize the sum of squared
differences between:

A) the estimated and actual slope coefficient.


B) the predicted and actual values of the dependent variable.
C) the intercept term and the residual term.

Question #9 of 11 Question ID: 1456697

Given the relationship: Y = 2.83 + 1.5X

What is the predicted value of the dependent variable when the value of the independent
variable equals 2?

A) –0.55.
B) 5.83.
C) 2.83.

Question #10 of 11 Question ID: 1456688

A simple linear regression is a model of the relationship between:

A) one or more dependent variables and one or more independent variables.


B) one dependent variable and one or more independent variables.
C) one dependent variable and one independent variable.

Question #11 of 11 Question ID: 1456693


A simple linear regression is performed to quantify the relationship between the return on
the common stocks of medium-sized companies (mid-caps) and the return on the S&P 500
index, using the monthly return on mid-cap stocks as the dependent variable and the
monthly return on the S&P 500 as the independent variable. The results of the regression
are shown below:

Coefficient Standard Error of Coefficient t-Value

Intercept 1.71 2.950 0.58

S&P 500 1.52 0.130 11.69

Coefficient of determination = 0.599

The strength of the relationship, as measured by the correlation coefficient, between the
return on mid-cap stocks and the return on the S&P 500 for the period under study was:

A) 0.774.
B) 0.599.
C) 0.130.

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