The Main Advantage of Using Panel Data Over Cross Sectional

question 40

Multiple Choice

The main advantage of using panel data over cross sectional data is that it

• A)gives you more observations.
• B)allows you to analyze behavior across time but not across entities.
• C)allows you to control for some types of omitted variables without actually observing them.
• D)allows you to look up critical values in the standard normal distribution.

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Definitions:

Futures Contract

A uniform agreement to engage in a purchase or sale at a future time, with the price established beforehand.

Foreign Exchange Exposure

The risk associated with changes in foreign exchange rates affecting the value of investments held in foreign currencies.

Derivatives

Financial instruments whose value is based on the value of another asset, such as futures, options, and swaps.

Transactions Exposure

The potential risk of value change in foreign currency transactions due to fluctuating exchange rates.