Question

The University Secretary wants to determine how University grade point average, GPA (highest being 4.0) of a sample of students from the University depends on a student’s high school GPA (HS), age of a student (A), achievement test score (AS), average number of lectures skipped each week (S), gender of a student (where M=1 if a student is male or 0 otherwise), computer or PC ownership of a student (where PC=1 if a student owns a computer or 0 otherwise), the means of transport to school (drive, bicycle or walk; where D=1 if a student drives to campus or 0 otherwise, B=1 if a student bicycles to campus or 0 otherwise), and finally, the subject major of the student (finance, human resource, marketing and accounting; where F=1 if a student majors in finance or 0 otherwise, HR=1 if a student majors in human resource or 0 otherwise, MR=1 if a student majors in marketing or 0 otherwise). Use the correlation matrix and dummy regression output to answer the questions.

GPA

HS

A

AS

S

M

PC

D

B

F

HR

MR

GPA

1.00

HS

0.41

1.00

A

-0.02

-0.26

1.00

AS

0.21

0.35

-0.08

1.00

S

-0.26

-0.09

-0.08

0.12

1.00

M

-0.08

-0.21

0.04

0.18

0.20

1.00

PC

0.22

0.04

-0.09

0.04

-0.21

-0.07

1.00

D

-0.11

-0.19

0.27

-0.20

0.26

-0.08

0.02

1.00

B

0.08

0.14

-0.05

0.16

-0.13

0.13

-0.10

-0.38

1.00

F

0.08

0.12

-0.22

0.18

0.06

0.04

0.08

-0.08

-0.11

1.00

HR

0.08

0.17

-0.49

0.08

0.06

0.05

-0.04

-0.11

0.07

-0.12

1.00

MR

-0.10

-0.19

0.37

-0.11

-0.05

0.02

0.05

0.08

0.01

-0.15

-0.79

1.00

a) Which 2 pairs of variables are most correlated with the regressand?

b) Which 3 pairs of variables are mostly multicollinear?

c) Identify 3 pairs of variables that are most correlated.

The estimated equation by OLS is:

Residual (df) =129, TSS=19.41, ESS=14.03.

Answer 1