Question #21
Reading: Reading 1 Multiple Regression
PDF File: Reading 1 Multiple Regression.pdf
Page: 9
Status: Unattempted
Correct Answer: A
Question
Jill Wentraub is an analyst with the retail industry. She is modeling a company's sales over time and has noticed a quarterly seasonal pattern. If she includes dummy variables to represent the seasonality component of the sales she must use:
Answer Choices:
A. three dummy variables
B. four dummy variables
C. one dummy variables
Explanation
Three. Always use one less dummy variable than the number of possibilities. For a
seasonality that varies by quarters in the year, three dummy variables are needed.