A Variable Is Exogenous If That Variable

question 40

Multiple Choice

A variable is exogenous if that variable:

• A) has no effect on the treatment variable beyond the combined effects of other variables already in the determining function.
• B) has no effect on the outcome variable beyond the combined effects of other variables already in the determining function.
• C) has a strong correlation with the weather.
• D) is uncorrelated with the residuals of a regression estimated by OLS.

---

Definitions:

Conservative Financing Policy

A financial strategy that prioritizes safety and liquidity, often characterized by maintaining high cash reserves and using less leverage.

Trade Credit

An agreement in which a customer can purchase goods or services on account, paying the supplier at a later scheduled date.

Capital Budget

The process of planning and managing a company's long-term investments in major assets or projects.

Surplus Cash

Excess cash held by a company over and above its operating needs and plans, which can be invested or returned to shareholders.