Which of the Following Statements Is True When the Dependent

question 9

Multiple Choice

Which of the following statements is true when the dependent variable, y > 0?

• A)Taking log of a variable often expands its range.
• B)Models using log(y) as the dependent variable will satisfy CLM assumptions more closely than models using the level of y.
• C)Taking log of variables make OLS estimates more sensitive to extreme values.
• D)Taking logarithmic form of variables make the slope coefficients more responsive to rescaling.

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Definitions:

Deferred Tax Liabilities

Future tax payments a company owes but has not yet paid, often arising from timing differences between accounting practices and tax laws.

Deferred Tax Assets

Deferred tax assets are items on the balance sheet that reduce future tax obligations because of overpayment or advance payment of taxes or future tax benefits due to allowable temporary differences.

Book Income Tax Expense

The amount of income tax expense that is reported on the financial statements, which may differ from the actual tax paid due to differences between accounting and tax rules.

Temporary Difference

A difference between the carrying amount of an asset or liability in the balance sheet and its tax base, which will result in taxable or deductible amounts in the future.