NO.PZ2022120202000013
问题如下：
One input to a regression model that is designed to estimate the size of a mutual fund is a variable indicating whether a fund has a return that is greater than 20%, between 10% and 20%, between 0% and 10%, or negative. Another is an input indicating whether the fund focuses on equities, bonds, or money market instruments. Explain how these variables would be handled.
选项：
解释：
In the case of the first variable there is a natural ordering. We could define the input as 0 if the fund has a negative return, 1 if has a return between 0 and 10%, 2 if it has a return between 10 and 20%, and 3 if it is greater than 30%. To deal with the second variable, we would use three dummy variables. The first would equal 1 if the fund focused on equity and zero otherwise. The second would equal 1 if the fund focused on bonds and zero otherwise. The third would equal 1 if the fund focused on money market instruments and zero otherwise.
