Multiple regression analysis, categorial variables, continuous variable

Hi, I would like to run a multiple regression where my dependent variable is continuous. One of my independent variable is continuous, and the other independent variable is a category (small cap, midcap, largecap). I am not sure how to construct categorical independent variable. Do I have to use dummyvar function or can I just use 0 and 1 (1 for the category that applies to the observation).

Thank you in advance.

Answer 1

[bym]

as long as you have one category variable, you can use just (0,1).

If , for example you had more than one category (small cap , mid cap, large cap); (public,private);(transportation,conglomerate,medical,etc) you would have to use dummyvar

Answer 2

[KKR]

Thank you for your quick response. So, I should just add three more columns (with zeros and ones) with first one(continuous variale) and run a normal regression. Correct?

[bym]

that would be a good start, not knowing the nature of your data it would be difficult to comment further