BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Dummy variables If a categorical variable takes only two values (e.g., ‘Yes’ or ‘No’), then an equivalent numerical variable can be constructed taking value 1 if yes and 0 if no. This is called a dummy variable.

Detailed explanation-2: -Three dummy variables are required (one fewer than the number of periods). The coding based on these variables is shown in columns E, F and G of Figure 1. Column E contains a 1 for revenue data in Q1 and a 0 for revenue data not in Q1. Similarly, column F contains a 1 for data in Q2 and a 0 for data not in Q2.

Detailed explanation-3: -It may be necessary to dummy code variables in order to meet the assumptions of some analyses. A common scenario is to dummy code a categorical variable for use as a predictor in multiple linear regression (MLR).