In a Simultaneous Equations Model, If Any Variable Is Determined

question 6

Multiple Choice

In a simultaneous equations model, if any variable is determined outside of the model, then it is considered a(n) :​

• A)​endogenous variable.
• B)​random variable.
• C)​exogenous variable.
• D)​error variable.

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Definitions:

Excess Cash

Additional cash held by a business that exceeds its operational and investment needs.

Earnings Per Share

A financial metric that measures the total earnings available to shareholders divided by the number of shares outstanding.

Debt/Equity Ratio

A ratio demonstrating the comparative levels of shareholders' equity and borrowed funds deployed to finance company assets.

Residual Dividend Policy

A strategy where dividends paid to shareholders are based on earnings left over after all operational and project expenses are covered.