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Explanation:

Explanation

The Variance Inflation Factor (VIF) is calculated as:

$VIF_j = \frac{1}{1 - R_j^2}$

Given:

$R_j^2 = 0.7$

Calculation: $VIF_j = \frac{1}{1 - 0.7} = \frac{1}{0.3} = 3.33$

Therefore, the VIF for $X_j$ is 3.33, which corresponds to option C.

Interpretation: A VIF of 3.33 indicates moderate multicollinearity, as VIF values above 5-10 are typically considered problematic.

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In the process of quantifying multicollinearity issues in a multiple regression, the coefficient of determination obtained from regressing $X_j$ on the remaining independent variables is $R_j^2 = 0.7$. The variance inflation factor for $X_j$ is closest to: | Chartered Financial Analyst Level 2 Quiz - LeetQuiz

Chartered Financial Analyst Level 2

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In the process of quantifying multicollinearity issues in a multiple regression, the coefficient of determination obtained from regressing $X_j$ on the remaining independent variables is $R_j^2 = 0.7$ . The variance inflation factor for $X_j$ is closest to:

Chartered Financial Analyst Level 2

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Explanation

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In the process of quantifying multicollinearity issues in a multiple regression, the coefficient of determination obtained from regressing XjX_jXj​ on the remaining independent variables is Rj2=0.7R_j^2 = 0.7Rj2​=0.7. The variance inflation factor for XjX_jXj​ is closest to:

In the process of quantifying multicollinearity issues in a multiple regression, the coefficient of determination obtained from regressing $X_j$ on the remaining independent variables is $R_j^2 = 0.7$ . The variance inflation factor for $X_j$ is closest to: