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(Yi, X1i, X2i) satisfy the following assumptions ; in addition, var (u;X1;, X2i) =3 and var (X1;) = 1. A random sample of size n

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(Yi, X1i, X2i) satisfy the following assumptions ; in addition, var (u;X1;, X2i) =3 and var (X1;) = 1. A random sample of size n = 312 is drawn from the population. Use the formula below to answer the following questions, B, = 1 1 - P X , * 2 Assume that X, and X2 are uncorrelated. Compute the variance of B1 . The variance of , is, 2 (Round your response to five decimal places) Assume that corr (X1, X2) =0.81. Compute the variance of B1 . The variance of B, is, 2 = (Round your response to five decimal places) Which of the following statements is correct? A. The larger the correlation between X, and X2, the smaller the variance of By . Nevertheless, it is best include X2 in the regression if it is a determinant of Y. O B. The larger the correlation between X, and X2, the larger the variance of By . Thus, it is best to leave X2 out of the regression even if it is a determinant of Y. O C. The larger the correlation between X, and X2, the smaller the variance of B1 . Thus, it is best to leave X2 out of the regression even if it is a determinant of Y

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