Explain what is meant by perfect collinearity

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1. How does multicollinearity manifest itself in a regression situation?

2. Explain what is meant by perfect collinearity. What happens when perfect collinearity is present?

3. Is it true that the regression equation can never be used adequately for pre- diction purposes if multicollinearity exists? Explain.

4. In a regression of Y on the two explanatory variables X1 and X 2, the F ratio was found not to be signi?cant. Neither t ratio was found to be signi?cant, and R2 was found to be 0.12. Do you believe that multicollinearity is a problem here? Explain.

Reference no: EM13968661

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