VIF: Multicollinearity Detection - Quant Trader Interview Question
Difficulty: Medium
Category: Statistics & Regression
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Topics: statistics, regression, multicollinearity, VIF
Problem Description
You are building a multiple linear regression model to predict the price of a house based on several predictor variables, including square footage, number of bedrooms, age of the house, and property tax rate. After fitting the model, you calculate the Variance Inflation Factor (VIF) for each predictor. One of the predictors has a VIF greater than 10. What does this indicate about that predictor in the regression model?
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