Suppose That the Conditional Variance Is Var(u_i|X_i)= λH(X_i)where λ Is

question 21

Multiple Choice

Suppose that the conditional variance is var(u_i|X_i) = λh(X_i) where λ is a constant and h is a known function. The WLS estimator is

• A)the same as the OLS estimator since the function is known
• B)can only be calculated if you have at least 100 observations
• C)the estimator obtained by first dividing the dependent variable and regressor by the square root of h and then regressing this modified dependent variable on the modified regressor using OLS
• D)the estimator obtained by first dividing the dependent variable and regressor by h and then regressing this modified dependent variable on the modified regressor using OLS

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