If the Assumption That Cov(x,e)= 0 Is Not True,what Are

question 19

Multiple Choice

If the assumption that cov(x,e) = 0 is not true,what are the implications of least squares estimators?

• A)still BLUE for all sample sizes
• B)consistent and normally distributed in very large sample sizes
• C)unbiased,but not BLUE for small samples
• D)inconsistent;parameter estimates do not converge to true values regardless of sample size.

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Definitions:

Unearned Revenues

Income received by an individual or company for a service or product that has yet to be provided or delivered.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of assets, provision of services, or other means.

Net Income

The total earnings of a company after deducting all expenses and taxes from total revenue.

Retained Earnings

The portion of net income that is not distributed as dividends to shareholders, but instead is reinvested in the company or used to pay off debt.