volume 1, page 345 of curriculum, 3rd paragraph, 6th line … says
‘if we make the mistake of including dummy variables for four rather than three quarters, we have violated assumption 2 of multiple regression model…’
can anyone possibly explain , How have we violated assumption 2 that says independent variables are not random and no exact linear relation exists between them?
If the sum of all the variables = 4… Then there exists a linear relationship where
q1+q2+q3+q4 = 1. But regression assumes that the variables are independent. But in this case it becomes dependant… So we got to eliminate atleast 1 variable from this…