Consider a categorical variable with N options in a multiple linear regression model, for example, month has $12$ options $($Jan$,$ Feb, $...,$ Dec$),$ movie genre can be drama, thriller, family, action, etc. Which of the following statement on multi$-$collinearity is true:

Group of answer choices

You can define a binary variable for each of the N options.

You can define a binary variable for each of at most N$-1$ options, you must leave at least one option out as the default.

None of these statements is correct.

You can only define one binary variable for one of the N options, and leave all other options as the default.