CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

Multicollinearity in linear regression is caused by:

I. Heteroskedastic and serially correlated residuals.
II. The dependent variable and an independent variable being highly correlated with each other.
III. Two or more dependent variables being highly correlated with each other.
IV. Two or more independent variables being highly correlated with each other.
Correct Answer: IV

Multicollinearity in linear regression is caused by two or more independent variables (or linear combinations of independent variables) being highly correlated with each other.

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danlan2 This is the definition
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