If We Use a Quasi Instrument for to Estimate a 2SLS

question 14

Multiple Choice

If we use a quasi instrument for to estimate a 2SLS, than the probability limit for the 2SLS estimate of B1^ is: (Note s=standard deviation)

• A) plimB1^=B1+(corr(X,e)/corr(Z, e) )*(\(\sigma\)_e/\(\sigma\)_X1)
• B) plimB1^=B1+(corr(Z,e)/corr(Z, X))*(\(\sigma\)_e/\(\sigma\)_X1)
• C) plimB1^=B1+(corr(Z,e)/corr(X,e) )*(\(\sigma\)_e/\(\sigma\)_X1)
• D) plimB1^=B1+(corr(Z,e)/corr(Z, Y))*( \(\sigma\)_e/\(\sigma\)_X1)

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Definitions:

Capital Structures

Refers to the way a corporation finances its assets through a combination of debt, equity, or hybrid securities.

Equity Plan

A compensation strategy companies use to provide their employees with ownership interest in the company, often through stock options or shares.

Break-Even EBIT

The level of Earnings Before Interest and Taxes at which a company covers all its operating expenses and does not make a profit or loss.

Bond Issue

The process by which a government or corporation raises funds by selling bonds to investors, which are then repaid with interest at a future date.