This

**preview**shows pages 1-3. to view the full**10 pages of the document.**QM222 SECTION D1: Modeling Business Decisions Midterm

BOSTON UNIVERSITY

School of Management

Fall 2015

Sign the following statement. Grades will not be given to students who do not do so.

I have not cheated or helped anyone else cheat on this exam.

________________________________

Signature

Name:_______________________________

DO NOT WRITE YOUR NAME ANYWHERE ELSE ON THIS TEST.

NOTE: WE GIVE LOTS OF PARTIAL CREDIT ON TESTS. Always say something.

When we ask for calculations, show all calculations, even those you could do just on the calculator.

Questions asking for explanations and calculations are graded as incorrect if no adequate

explanation is given.

Read every question carefully.

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

SECTION 1 Your Regression

Answer the following questions regarding the regressions that you have brought with you (or the regressions

that Professor Kahn gives to you if you don’t have a regression.)

Be sure to put your name on the page with your regression. When you complete the test, staple your

regression sheet to your test. Make sure all variables (including your Y variable) are defined on your

regression sheet.

Answer these questions based on your simpler regression (with the fewest variables):

1. (4 points) What does each observation in your data set represent? (in a few words at most)

2. (5 points) Use the value of the coefficient on your key variable (the variable that appears in both

regressions) in a sentence that explains what it tells us. In other words, interpret this coefficient. (Do

not use statistics terms in your answer. Be specific but concise.)

3. (5 points) What specifically do you learn from the t-statistic on this coefficient in this regression? (Do not

answer what generally the t-test tells us. Answer about what the t-statistic in THIS case.)

4. (5 points) What specifically do you learn from the p-value on this coefficient in this regression output?

(The more specifically you can answer this question, the more points you get.)

Answer these questions based on your multiple regression, the regression that adds a variable that had

been omitted in the simpler regression:

5. (4 points) Use the value of the coefficient on your key variable in the multiple regression (i.e. the key

variable that you discussed above) in a sentence that explains what it tells us. In other words, interpret

this coefficient. (Do not use statistics terms in your answer. Be specific but concise.)

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

6. (4 points) What was the sign of the omitted-variable bias in the simpler regression, positive or negative?

CIRCLE ONE: POSITIVE NEGATIVE IMPOSSIBLE TO KNOW

Explain exactly how you know, including the calculations (if any) that led you to this answer.

7. (4 points) What is the sign of the correlation between your key variable (X1) and the variable omitted in

the first regression (X2)?

CIRCLE ONE: POSITIVE NEGATIVE IMPOSSIBLE TO KNOW

Explain exactly how you know, including the calculations (if any) that led you to this answer.

In everyday language (no statistics terms), what does this sign tell us? In your answer, use the real variable

names (not X1, X2 ).

8. (3 points) What would be the coefficient a1 if you ran a regression with X2 as the dependent variable

and X1 as the explanatory variable? Show your calculations.

VALUE OF a1 ______________________

Calculations:

###### You're Reading a Preview

Unlock to view full version