(Requires Chapter 8)When Using Panel Data and in the Presence

question 36

Multiple Choice

(Requires Chapter 8) When using panel data and in the presence of endogenous regressors

• A)the TSLS does not exist.
• B)you do not have to worry about the validity of instruments, since there are so many fixed effects.
• C)the OLS estimator is consistent.
• D)application of the TSLS estimator is straightforward if you use two time periods and difference the data.

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Definitions:

Future Dividends

Future dividends refer to the dividends that a company plans to pay out to its shareholders in the future, based on its earnings and dividend policy.

Annual Dividend

The total amount of dividend payments a company makes to its shareholders in a year.

Required Return

The minimum profit or yield that an investor expects to receive on an investment, considering the risk involved.

Stock Purchase

The act of acquiring ownership shares in a company, representing a claim on part of its assets and earnings.