An observation with extreme values in one or more independent variables (predictors):
A)has reduced influence on the estimated coefficients.
B)has increased influence on the estimated coefficients.
C)causes an overstated estimate of the standard error.
D)leads to high correlations between the X's.

Question

Quizplus · Accepted Answer

Observations with extreme values in one or more independent variables (often referred to as outliers or leverage points) tend to have increased influence on the estimated coefficients in a regression model. This is because the least squares estimation method, which is commonly used, tries to minimize the overall error, and points far from the majority can disproportionately affect the slope of the regression line.

An Observation with Extreme Values in One or More Independent