Which one of the following is true?
Question 17 options:
When choosing between two regression models to make reliable predictions, we look for the highest R square and all VIF's to be less than 5. 

When choosing between two regression models to make reliable predictions, we look for the highest adjusted R square and all VIF's to be less than 0.05. 

When choosing between two regression models to make reliable predictions, we look for the lowest adjusted R square and all VIF's to be less than 0.05. 

When choosing between two regression models to make reliable predictions, we look for the highest adjusted R square and all VIF's to be less than 5. 

When choosing between two regression models to make reliable predictions, we look for the highest R square and all VIF's to be less than 0.05. 
The correct option is DWhen choosing between two regression models to make reliable predictions, we look for the highest adjusted R square and all VIF's to be less than 5.
This is because VIF cant be less than 1, and a higher than 5 VIF means very high multicoliniarity.
Adjusted R square means the variation from mean that the model is capturing, adjusted to take account for higher than required variables. The higher the adjusted R squared the better.
Please note that we are talking about adjusted R squared. Normal R squared is not necessarily the higher the better.
Get Answers For Free
Most questions answered within 1 hours.