Suppose You Estimate the Effect of a Treatment Using a Cross-Sectional

question 34

Multiple Choice

Suppose you estimate the effect of a treatment using a cross-sectional regression analysis as 10 while the true effect is 15.The difference of 5 represents which of the following?

• A) measurement error
• B) bias
• C) small sample error
• D) difference-in-difference estimation

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with dividends that are paid out prior to those to common stockholders.

Common Stock

A type of equity security that represents ownership in a corporation, with holders typically having voting rights and receiving dividends.

Market Price

The present rate at which a good or service is available for purchase or sale in an open market.

Cash Dividend

Funds distributed by a business to its owners, often sourced from its profits.