Calculating VIFs typically involves running sets of auxiliary regressions, one regression for each independent variable in an equation. To get practice with this procedure, calculate the following:
a. The VIFs for N, P, and I from the Woody’s data in Table 3.1
b. The VIFs for BETA, EARN, and DIV from the stock price example data in Table 7.2
c. The VIF for X1 in an equation where X1 and X2 are the only independent variables, given that the VIF for X2 is 3.8 and N = 28
d. The VIF for X1 in an equation where X1 and X2 are the only independent variables, given that the simple correlation coefficient between X1 and X2 is 0.80 and N = 15
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