In stepwise regression procedure,if two independent variables are highly correlated,then:
A) both variables will enter the equation.
B) only one variable will enter the equation.
C) neither variable will enter the equation.
D) None of these is correct.

Question

Quizplus · Accepted Answer

In stepwise regression, the procedure selects the independent variables based on their ability to improve the fit of the model (as measured by a statistical criterion such as the F-test). If two variables are highly correlated, they will provide similar information and the model may become unstable, leading to multicollinearity. In this case, the stepwise regression may choose only one of the variables that is most predictive, to avoid the problem of multicollinearity.

In Stepwise Regression Procedure,if Two Independent Variables Are Highly Correlated,then