Question #13

Reading: Reading 1 Multiple Regression

PDF File: Reading 1 Multiple Regression.pdf

Page: 5

Status: Unattempted

Correct Answer: A

Part of Context Group: Q13-14 First in Group
Shared Context
- Based on the credit spread model, if an issuer gets included in the CDX index and assuming everything else the same, which of the following statements most accurately describes the model's forecast? A) The credit spread on the firm’s issue would decrease by 10 bps. B) The credit spread on the firm’s issue will increase by 32 bps. C) The credit spread on the firm’s issue will decrease by 32 bps.
Question
Which of the following is least likely an assumption of multiple linear regression?
Answer Choices:
A. The dependent variable is not serially correlated
B. There is no linear relationship between the independent variables
Explanation
The assumption calls for the residual (or errors) to be not serially correlated. The dependent variable can have serial correlation. Other assumptions are accurate.
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