If the Model ​ Satisfies the First Four Gauss-Markov

question 3

Multiple Choice

If the model ​ satisfies the first four Gauss-Markov assumptions, then v has:

• A)​a zero mean and is correlated with only x₁.
• B)​a zero mean and is correlated with x₁ and x₂.
• C)​a zero mean and is correlated with only x₂.
• D)a ​zero mean and is uncorrelated with x₁ and x₂.

---

Definitions:

Semiannual Interest

Interest that is calculated and paid twice a year, often on a bond or loan.

Bond Premium

The amount by which the market price of a bond exceeds its face value, usually occurring when the bond's interest rate is higher than the current market rate.

Straight-line Method

An accounting method of depreciating fixed assets where the asset's cost is evenly distributed over its useful life to allocate the expense of the asset over its lifespan.

Earnings Per Share

A measure of a company's profitability, calculated as net income divided by the number of outstanding shares.