The Primary Distinction Between a Linear Probability Model and Linear

question 2

Multiple Choice

The primary distinction between a linear probability model and linear regression model is:

• A) you can't interpret the coefficients in a linear probability model.
• B) a linear probability model never suffers from heteroscedasticity.
• C) the standard errors of a linear probability model will be larger.
• D) the outcome is dichotomous in a linear probability model.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board that is used globally.

U.S. GAAP

United States Generally Accepted Accounting Principles, which are a set of rules and standards for financial reporting and accounting practices in the U.S.

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading the cost over its useful life.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that are globally accepted.