Assume That You Have Used the OLS Estimator in the Cointegrating

question 14

Multiple Choice

Assume that you have used the OLS estimator in the cointegrating regression and test the residual for a unit root using an ADF test. The resulting ADF test statistic has a

• A)normal distribution in large samples.
• B)non-normal distribution which requires ADF critical values for inference.
• C)non-normal distribution which requires EG-ADF critical values for inference.
• D)normal distribution when HAC standard errors are used.

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Definitions:

Market Capitalization Rate

The expected return on an investment in a company, based on its current market capitalization and future profit projections.

FCFE

Free Cash Flow to Equity, a measure of how much cash is available to the equity shareholders of a company after all expenses, reinvestment, and debt payments.

Intrinsic Value

Intrinsic Value is the actual value of a company, stock, currency, or product determined through fundamental analysis without reference to its market value.

FCFE

Free Cash Flow to Equity, a measure of how much cash is available to the equity shareholders of a company after all expenses, reinvestment, and debt payments have been made.