Regression Fundamentals: Below Is A Scored Review of Your Assessment. All Questions Are Shown

9/8/22, 8:39 AM Assessment Review - Corporate Finance Institute
Corporate Finance Institute
Regression Analysis - Fundamentals & Practical Applications
Below is a scored review of your assessment. All questions are shown.
Regression Fundamentals
Correct Answer
Partially Correct
Incorrect Answer
https://cfi.onlinetests.app//Assess.aspx?guid=2EA1A31EF8AD424CABE2191A27B7DAE9&a=R1 1/17
1 Which of the following is NOT true about linear regression?
Your Answer
Linear regression is used to predict new values of the target variable.
Correct Answer
Linear regression allows us to predict new values of the independent variable.
Explanation
With Linear Regression, we use the independent variables to fit and predict the target variable.
2 The ordinary least squares (OLS) algorithm ________________ .
Your Answer
Minimizes the square of the sum of residuals
Correct Answer
Minimizes the sum of square residuals
Explanation
We want to minimize the difference between predictions and actuals and square before summing so positive
and negative errors don’t cancel each other out.
3 Overfitting occurs when _____________.
Your Answer
Our model becomes too specific to the training data
Correct Answer
Our model becomes too specific to the training data
Explanation
Overfitting occurs when the model learns relations that only exist in the training data. This creates a model that
is overly specific.
4 Using multiple linear regression to add in more independent variables ___________.
Your Answer
can help explain more variation in the target variable
Correct Answer
can help explain more variation in the target variable
Explanation
Multiple linear regression can help to explain more of the variation in the target variable as there are often more
than one factor that determines the target variable. However, this can also lead to overfitting of the data due to
the algorithm picking up on random fluctuations.
5 Multicollinearity is the phenomenon where _________________.
Your Answer
the independent variables are strongly correlated with other independent variables
Correct Answer
the independent variables are strongly correlated with other independent variables
Explanation
Multicollinearity is where independent variables are correlated with each other causing the algorithm to be
unable to separate the effects from each variable.
6 Which of the following is NOT an assumption of ordinary least squares (OLS):
Your Answer
Random Sampling
Correct Answer
Random Sampling
Explanation
None.
7 Which assumption of OLS assumes that there is no correlation between the error and the independent
variables?
Your Answer
Endogeneity
Correct Answer
Endogeneity
Explanation
None.
8 A regression analysis between sales (S) (in $1000) and price (P) (in dollars) resulted in the following equation:
S = 50,000 – 8P

The above equation implies that an ___________.
Your Answer
increase of $1 in price is associated with a decrease of $8000 in sales
Correct Answer
increase of $1 in price is associated with a decrease of $8000 in sales
Explanation
None.
9 Which of the following is the formula for the mean square error?
Your Answer
Correct Answer
Explanation
None.
10 Suppose we build a model to predict a store’s sales with three independent variables; customers per day,
average daily temperature, and number of products available. If we calculate the p-values for these
variables as below, which variables are significant and should be kept in the model? Select all that apply.
Variable p-Value
Customers per day (I) 0.0
Average daily temperature (II) 0.54
Number of products available (III) 0.03
Your Answer
Variable I
Variable III
Correct Answer
Variable I
Variable III
Explanation
None.
11 Suppose we have produced a simple linear regression model with the following form:
y = 0.65x + 2.9

We then calculate the coefficient of determination as 0.92 and a p-value of 0.1. Which of the following best
describes our model?
Your Answer
The model explains a high amount of variance but the slope is statistically insignificant
Correct Answer
The model explains a high amount of variance but the slope is statistically insignificant
Explanation
The model explains a high amount of variance but the slope is statistically insignificant. The model explains 92%
of the variance but the p-value is greater than 0.05 so the coefficient is not statistically different from zero.
12 Which of the following evaluation metrics is relative to the total error?
Your Answer
Coefficient of determination
Correct Answer
Coefficient of determination
Explanation
The coefficient of determination is relative to the total error. The coefficient of determination is the
fractional amount of the total error described by using the independent variables.
13 Which method of regression produces a probability distribution as opposed to a point estimate?
Your Answer
Bayesian Regression
Correct Answer
Bayesian Regression
Explanation
None.
14 You are given a dataset of air pollution readings from several locations in an urban setting. The
measurements are taken every hour and include information about traffic flow. To perform regression on
this longitudinal data, what kind of regression technique would you use?
Your Answer
Repeated Measures Regression
Correct Answer
Repeated Measures Regression
Explanation
None.
15 You are working with customer data from a large video-on-demand provider, which contains numerical
fields with information such as average number of hours watched per month, number of logins per
month, time spent browsing per month etc.
In this data, there is a flag that indicates whether the customer canceled the service or not (1 for yes, 0 for
no). You are looking to build a model from this data to classify what current customers will cancel.
What type of model would you use?
Your Answer
Logistic Regression
Correct Answer
Logistic Regression
Explanation
None.
Page 1 of 1
Summary
Return to Course
Software by
Version 11.2
Privacy Policy. Assessment content is copyright 2022, Corporate Finance Institute.

Regression Fundamentals: Below Is A Scored Review of Your Assessment. All Questions Are Shown

Uploaded by

Copyright:

Available Formats

You might also like

Regression Fundamentals: Below Is A Scored Review of Your Assessment. All Questions Are Shown

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Regression Fundamentals: Below Is A Scored Review of Your Assessment. All Questions Are Shown

Uploaded by

Copyright:

Available Formats

9/8/22, 8:39 AM Assessment Review - Corporate Finance Institute

Corporate Finance Institute

Regression Analysis - Fundamentals & Practical Applications

Below is a scored review of your assessment. All questions are shown.

1 Which of the following is NOT true about linear regression?

2 The ordinary least squares (OLS) algorithm ________________ .

3 Overfitting occurs when _____________.

4 Using multiple linear regression to add in more independent variables ___________.

5 Multicollinearity is the phenomenon where _________________.

6 Which of the following is NOT an assumption of ordinary least squares (OLS):

The above equation implies that an ___________.

Customers per day (I) 0.0

Average daily temperature (II) 0.54

Number of products available (III) 0.03

12 Which of the following evaluation metrics is relative to the total error?

13 Which method of regression produces a probability distribution as opposed to a point estimate?

What type of model would you use?

Privacy Policy. Assessment content is copyright 2022, Corporate Finance Institute.

You might also like