Simultaneous Equations Bias Is a Situation Where

question 8

Multiple Choice

Simultaneous equations bias is a situation where

• A) There is a two-way causal relationship between the explanatory and explained variable
• B) There is a two-way causal relationship between two selected explanatory variables
• C) There is a two-way causal relationship between two selected independent variables
• D) There is a two-way causal relationship between the residuals of two regression models

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Definitions:

Retention Ratio

The proportion of a company's net income that is retained rather than paid out as dividends, indicating reinvestment back into the company.

Return on Assets

A financial ratio that indicates how profitable a company is relative to its total assets.

Internal Growth Rate

The maximum rate at which a company can expand using only internal financing without resorting to borrowing or selling equity.

Dividend Payout Ratio

The fraction of earnings a company pays out to its shareholders as dividends, represented as a percentage of its net income.