Which of the Following Identifies an Advantage of First Differencing

question 3

Multiple Choice

Which of the following identifies an advantage of first differencing a time-series?

• A)First differencing eliminates most of the serial correlation.
• B)First differencing eliminates most of the heteroskedastcicty.
• C)First differencing eliminates most of the multicollinearity.
• D)First differencing eliminates the possibility of spurious regression.

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Definitions:

Reasonable Period

An amount of time which is fairly appropriate under the circumstances, often subject to interpretation based on the specific context.

Exact Period

A specific timeframe during which certain actions are to take place or conditions must be met.

Offer Open

A proposal made in business or negotiations that remains valid for acceptance until a specified date or until withdrawn by the proposer.

Sailboat Sale

The transaction process involved in transferring ownership of a sailboat from one party to another.