Which of the Following Is True of the Correlated Random

question 10

Multiple Choice

Which of the following is true of the correlated random effects approach (CRE) ?

• A)The CRE approach assumes that the unobserved effect is uncorrelated with the observed explanatory variables.
• B)The CRE approach cannot be used if the regression model includes a time-constant explanatory variable.
• C)The CRE approach considers that the unobserved effect is correlated with the average level of explanatory variables.
• D)The CRE estimate equals the random effects estimate.

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Definitions:

Minimum Rate

The lowest acceptable or allowable rate, often referring to wages, interest rates, or other financial variables.

Annual Margin

The amount of profit a company generates over a year after all expenses have been subtracted from revenues.

Investment Center

A business unit or segment within a larger corporation that is responsible for its own revenue, expenses, and investments, often evaluated on its return on investment.

Return on Assets

Return on Assets (ROA) is a financial ratio that indicates the profitability of a company relative to its total assets.