Which of the Following Assumptions Is Required for Obtaining Unbiased

question 2

Multiple Choice

Which of the following assumptions is required for obtaining unbiased random effect estimators?

• A)The idiosyncratic errors are heteroskedastic.
• B)The unobserved effect is independent of all explanatory variables in all time periods.
• C)The idiosyncratic errors are serially correlated.
• D)The unobserved effect is correlated with the explanatory variables.

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Definitions:

Geometric Average Return

A method of calculating the average rate of return on an investment over time that accounts for compounding.

Returns

The profit or loss derived from investing or saving, often expressed as a percentage of the initial investment.

Canadian Common Stocks

Shares representing equity ownership in corporations based in Canada, entitling holders to vote on corporate matters and receive dividends.

Long Bonds

Bonds with a long duration to maturity, typically over 10 years, often associated with higher risk but higher yield.