Under What Conditions Is the Bias Caused by Autocorrelaed Errors

question 12

Multiple Choice

Under what conditions is the bias caused by autocorrelaed errors in a fixed effect model the most severe?

• A) We have many observations for each unit.
• B) We have few observations for each unit.
• C) We have many observations for each time period.
• D) We have few observations for each time period.

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Definitions:

Contra Stockholders' Equity

Accounts on a company's balance sheet that have a negative balance, reducing the overall equity of stockholders.

Retained Earnings

The portion of net profits not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Paid-In Capital

The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares themselves plus any additional paid-in capital.

Treasury Stock

Stocks that the original issuing company has repurchased, decreasing the total number of shares available for trade in the public market.