Extensions of Regression
Free CFA Level II lesson in Quantitative Methods. 13 min read, ~1,886 words.
Dummy variables: n categories require n - 1 dummies. The omitted category is the reference, and each coefficient measures the difference from that reference. Including n dummies + intercept for n categories is the dummy variable trap (perfect multicollinearity), a structural failure. Logistic regression: log-odds = b0 + b1(X1) +...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- extensions of regression
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