Linear Regression - Clip: Level Dummies
4 important questions on Linear Regression - Clip: Level Dummies
Level of here, return could vary between the week
Level dummies don't have x-variables thus
alpha1 is avg return on Monday
alpha4 is avg return on Wednesday
Later on we would like to test if avg return on mon is sig different from tues; test alpha1=alpha2 or go on and test all dummies alpha1=.....alpha5
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Going back to salary example: suppose sample consists of males and females, Yi=B1*Mi+B2*Fi+e,i
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