Question #38 - Reading 1 Multiple Regression

Reading: Reading 1 Multiple Regression

PDF File: Reading 1 Multiple Regression.pdf

Page: 17

Status: Unattempted

Correct Answer: B

Shared Context

- In regard to their conversation about the regression equation: A) Brent’s statement is correct; Johnson’s statement is incorrect. B) Brent’s statement is correct; Johnson’s statement is correct. C) Brent’s statement is incorrect; Johnson’s statement is correct.

Question

Regarding Brent's Statements 1 and 2:

Answer Choices:

A. Both statements are correct

B. Only Statement 2 is correct

C. Only Statement 1 is correct

Explanation

Statement 1 is correct. Comparing the formulae for computation of AIC and BIC, because ln(n) is greater than 2 for even small sample sizes, the BIC metric imposes a higher penalty for overfitting. Statement 2 is correct. Both AIC and BIC evaluate the quality of model fit among competing models for the same dependent variable. Lower values indicate a better model under either criteria. AIC is used if the goal is to have a better forecast, while BIC is used if the goal is a better goodness of fit.

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