Bi-Weekly Quiz 5

Task 1 (2 marks): Multiple Linear Regression Analysis

A small group of business school students is given a task to study the annual salary, Y (in $1,000), of the University of Sydney Business School alumni who are executives in middle management. They take a random sample of 50 alumni and collect data on the salary and the following six independent variables that may affect the salary of an executive: 

X₁ = Gender (M=1, F=0)                             X₂ = Years of experience                                  

X₃ = Years of education                              X₄ = Age (in years)                                  

X₅ = Corporate assets ($ millions)             X₆ = Last year’s profit of Company ($ millions)

The values of Y, X₁, X₂, X₃, X₄, X₅ and X₆ from the 50 alumni are given in Spreadsheet “Task 1”. The students build a multiple linear regression (MLR) model on Y using all independent variables. Conduct a multiple MLR analysis on the data. Answer Question 1 and Question 5. 

Instructions: Conduct a backward elimination procedure to obtain a reduced model. Answer Question 6 to Question 15.