Question: Given the Correlation Matrix below what two major problems can you foresee from the effort to forecast Sales using Price, Advertising and Income as independent

Given the Correlation Matrix below what two major problems can you foresee from the effort to forecast Sales using Price, Advertising and Income as independent variables in multiple regression? Correlation Matrix Variables Sales Price Advertising Sales 1.00 .00 Price -87 .01 1.00 1.00 Advertising .45 04 -.79 1.02 1.00 .00 Income .36 .07 25 .04 .21 .09 1) Sales and income do not have a significant relationship at the 96% confidence level. 2) Price and Advertising may be collinear (Multicollinearity) 3) Price and Sales do not have a significant linear relationship at the 95% confidence level. 4) Both 1 and 2 above 5) There are no problems indicated with the correlations

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