Question #89
Reading: Reading 1 Multiple Regression
PDF File: Reading 1 Multiple Regression.pdf
Page: 42
Status: Unattempted
Correct Answer: A
Question
A regression with three independent variables have VIF values of 3, 4, and 2 for the first, second, and third independent variables, respectively. Which of the following conclusions is most appropriate?
Answer Choices:
A. Only variable two has a problem with multicollinearity
B. Multicollinearity does not seem to be a problem with the model
C. Total VIF of 9 indicates a serious multicollinearity problem
Explanation
Multicollinearity occurs when an independent variable is highly correlated with a linear
combination of the remaining independent variables. VIF values exceeding 5 need to be
investigated while values exceeding 10 indicate strong evidence of multicollinearity.