​The Difference Between the LPM Model and the Logit and Probit

question 15

Multiple Choice

​The difference between the LPM model and the logit and probit models is that:

• A)​the LPM assumes constant marginal effects for all the independent variables, while the logit and probit models imply diminishing magnitudes of the partial effects.
• B)​the LPM assumes constant marginal effects for some of the independent variables, while the logit and probit models imply diminishing magnitudes of the partial effects.
• C)​the LPM assumes constant marginal effects for the dependent variable, while the logit and probit models imply diminishing magnitudes of the partial effects.
• D)​the LPM assumes different marginal effects for all independent variables, while the logit and probit models imply diminishing magnitudes of the marginal effects.

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Definitions:

Foreign Exchange Market

A global decentralized or over-the-counter market for trading currencies, determining foreign exchange rates for every currency.

Organized Exchange

is a regulated marketplace where securities, commodities, derivatives, and other financial instruments are traded between members.

Physical Location

The tangible and geographic place where a business operates or a service is provided.

Foreign Bonds

Bonds issued by a country's entities in the financial markets of another country and typically denominated in the currency of the country in which they are issued.