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Midterm

QM 222 Midterm-2015Exam


Department
Marketing
Course Code
SMG QM 222
Professor
All
Study Guide
Midterm

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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.

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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.)

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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:
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