A dummy variable regression: 1. Is a regression that is run as a trial before ru

Question

A dummy variable regression:

1. Is a regression that is run as a trial before running the actual regression

2. Is performed when the dependent variable is qualitative with yes or no possibility

3. Is a regression the results of which does not serve any practical purpose

4. Involves a categorical variable as one of the independent variables

Please help me understand. I want to say that the answer is either 2 or 4 but I am leaning heavily on 4. Please correct me if I am wrong and explain the concept. Thanks a lot

Explanation / Answer

A dummy variable regression is performed when the dependent variable is qualitative with yes or no possibility.

So the correct answer is option 2.

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