The Distinction Between Endogenous and Exogenous Variables Is

question 12

Multiple Choice

The distinction between endogenous and exogenous variables is

• A)that exogenous variables are determined inside the model and endogenous variables are determined outside the model.
• B)dependent on the sample size: for n > 100, endogenous variables become exogenous.
• C)depends on the distribution of the variables: when they are normally distributed, they are exogenous, otherwise they are endogenous.
• D)whether or not the variables are correlated with the error term.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in an open market.

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders and held in the company's treasury, reducing the amount of outstanding stock.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing shareholders' ownership interest.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the number of shares owned by shareholders.