Ordinary Least Squares Estimation Is Subject to Heterogeneity Bias If

question 2

Multiple Choice

Ordinary least squares estimation is subject to heterogeneity bias if _____.

• A)the regression model exhibits heteroskedasticty
• B)the unobserved effect is correlated with the observed explanatory variables
• C)the regression model includes a lagged dependent variable
• D)the explanatory variables do not change over time

---

Definitions:

Fair Market Value

The price that an asset would sell for in a transaction between willing participants under no compulsion to buy or sell.

Recorded Value

The value of an asset or liability as noted in the financial records or books of an organization.

Endowment Contribution

A donation made to an institution, with the stipulation that the principal amount must be maintained intact while the investment income can be used for organizational purposes.

Deferral Method

An accounting practice that postpones the recognition of revenue or expenses to a future period, rather than recording them in the period in which they are incurred.