Autocorrelation of the Error Terms

question 17

Multiple Choice

Autocorrelation of the error terms

• A)makes it impossible to calculate homoskedasticity only standard errors.
• B)causes OLS to be no longer consistent.
• C)causes the usual OLS standard errors to be inconsistent.
• D)results in OLS being biased.

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Definitions:

Intercompany Sales

Transactions involving the exchange of goods or services between subsidiaries within the same parent company.

Mark-Up

The amount added to the cost price of goods to cover overhead and profit, resulting in the selling price.

Effective Tax Rate

The true percentage of earnings that a person or business pays to the government, determined by dividing their total tax contribution by their taxable income.

Consolidated Statements

Consolidated Statements are financial reports that aggregate the financial position and operating results of a parent company and its subsidiaries, presenting them as a single entity.