The Formulae for the AIC and the BIC Are Different

question 37

Multiple Choice

The formulae for the AIC and the BIC are different. The

• A)AIC is preferred because it is easier to calculate
• B)BIC is preferred because it is a consistent estimator of the lag length
• C)difference is irrelevant in practice since both information criteria lead to the same conclusion
• D)AIC will typically underestimate p with non-zero probability

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Definitions:

Coupon

The percentage rate of interest a bond yields annually, based on its principal amount.

Current Yield

The annual return of an investment expressed as a percentage of its current price.

Rate of Return

The gain or loss on an investment over a specified period, proportionally expressed as a percentage of the investment's initial cost.

Capital Gains

The profit realized from the sale of assets or investments when the selling price exceeds the original purchase price.