The Multinomial Logit Is Preferable to OLS in the Case

question 38

Multiple Choice

The multinomial logit is preferable to OLS in the case of categorical dependent variables because it

• A)is constrained to be non-negative.
• B)accounts for the categorical nature of the independent variables.
• C)accounts for the categorical nature of the dependent variable.
• D)unbiased.

---

Definitions:

Market Beta

measures the volatility of an investment or portfolio relative to the overall market, indicating its sensitivity to market movements.

Treasury Bills

Short-term government securities issued at a discount from their face value, with maturities typically less than a year.

Unsystematic Risk

The risk associated with a particular company or industry, also known as idiosyncratic risk or specific risk.

Retail Industry

The sector of the economy that sells consumer goods directly to customers.