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**preview**shows pages 1-3. to view the full**9 pages of the document.**SM222 SECTION B6: Modeling Business Decisions Midterm

BOSTON UNIVERSITY

School of Management

Fall 2014

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.

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 are defined (including your Y variable)

Answer these questions based on your simple (1 variable) regression:

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

2. Use the value of the coefficient on your variable 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.)

Note: If your “simple” regression includes two (or more) X-variables that are different categories of the

same categorical variable, answer this question and the next only about the first of these variables.

3. Does this variable have a statistically significant effect on your dependent variable? Circle one:

YES NO

List three ways that you know based on the regression output:

i.

ii.

iii.

When a variable does not have a statistically significant effect, what does that mean, in everyday non-

statistics terms?

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Now answer these questions based on your multiple regression:

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

was also in the simple regression) 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.)

5. Compare the two coefficients on the key variable that enters both regressions. Explain as specifically as

possible why in the multiple regression, the coefficient it fell, rose, or stayed the same. This question will

be graded based on whether it identified precisely why we see this direction of change.

6. For two other variables in your multiple regression, explain specifically what we learn from the

coefficient. (If you have multiple dummy variables for a categorical variable, this counts here as one

variable. If you have two variables in total in your multiple regression, you obviously can only explain 1.)

7. Why is it important to include all of these other variables in your regression, if they are not the focus of

your research question? Explain fully.

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