In a System of M Simultaneous Equations,at Least M-1 Variables

question 14

Multiple Choice

In a system of M simultaneous equations,at least M-1 variables must be excluded from each equation for the equation to be identified.What does it mean if the equation is not identified?

• A)unique coefficient estimates for each variable cannot be identified using least squares
• B)the economic value of the predicted value cannot be identified
• C)the economic relationships are unclear and the equation should be dropped form the system
• D)the exogenous variables have been incorrectly identified

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Security's Value

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Future Cash Flows

Projected movement of money into and out of a business, essential for budgeting, financial planning, and investment analysis.

Future Cash Flows

The projected cash receipts and payments a company expects to incur over a certain period in the future.

Bond Ratings

Bond ratings are assessments made by credit rating agencies about the creditworthiness of a bond issuer, which affect the interest rates bonds carry.