Suppose You Have Data on Standardized Test Scores for a Sample

question 21

Multiple Choice

Suppose you have data on standardized test scores for a sample of high school juniors and seniors.You could test for the possibility that senior outperform juniors,holding all other independent variables constant,by

• A)directly entering junior and senior into your regression.
• B)including a binary dummy variable that is equal to 1 for seniors and 0 for juniors in your regression.
• C)including quadratic terms for junior and senior in your regression.
• D)estimating separate regressions for juniors and seniors.

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Definitions:

Significant Influence

The capacity of an investor to participate in the financial and operating policy decisions of an investee but not control those policies.

Equity Method

An accounting technique used by firms to assess the profits earned from their investments in other companies by reporting these profits as income.

Fair Value Method

An accounting approach that assesses assets and liabilities at their current market value rather than historical cost.

Equity Method

An accounting technique used by firms to assess the profits earned through their investments in other companies, recognizing income in proportion to ownership.