Actuarial Notes

CAS Exam MAS-II Fall 2018, Question 14

Study guide: Exam MAS-II

You are given the following information:

Ten classrooms are randomly assigned to receive one of three new teaching methods, labeled R, S and T. There are 300 students in these 10 classrooms. Student test scores are measured before and after the new teaching methods are implemented.

The following variables are considered:

  • CLASS_ID — Class ID number
  • METHOD_R — Indicator Variable (teaching method R = 1)
  • METHOD_S — Indicator Variable (teaching method S = 1)
  • STUDENT_ID — Student ID number
  • SEX — Indicator variable (female = 1)
  • SCORE_PRE — Student's test score before the new teaching method is implemented
  • SCORE — Student's test score after the new teaching method is implemented

You are given Model 1 for the score of STUDENT_ID i in CLASS_ID j.

Model Model Specification
1 SCORE_{ij} = \beta_0 + \beta_1 \times SEX_{ij} + \beta_2 \times SCORE\_PRE_{ij} + \beta_3 \times METHOD\_R_j + \beta_4 \times METHOD\_S_j + u_j + \varepsilon_{ij}
  • u_j \sim N(0, \sigma_{class}^2)
  • \varepsilon_{ij} \sim N(0, \sigma^2)
  • All u_j, \varepsilon_{ij} are mutually independent

Determine which of the following statements about Model 1 is true.

  • A) There are seven parameters in the model.
  • B) The value of \beta_1 varies across individual students.
  • C) \sigma_{\text{class}}^2 represents variance within the classroom.
  • D) \sigma^2 represents variance between the classrooms.
  • E) The intercept for each classroom is the same.

Answer this question and see the worked solution

Concepts tested

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