Nature and Purpose of Econometrics
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Questions and Answers

What is the literal meaning of econometrics?

  • Measurement in mathematics
  • Measurement in psychology
  • Measurement in physics
  • Measurement in economics (correct)

    • Which field does theoretical econometrics focus on?

  • Modelling long-term relationships between prices and exchange rates
  • Development of appropriate methods for measuring economic relationships specified by econometric models (correct)
  • Application of statistical and mathematical techniques to problems in finance
  • Explaining the determinants of loan credit risk

    • What does financial econometrics involve?

  • Application of statistical and mathematical techniques to problems in finance (correct)
  • Testing whether the CAPM or APT represent superior models for the determination of returns on risky assets
  • Measuring and forecasting the volatility of bond returns
  • Determine factors affecting firms performance

    • Which problem may be solved by an Econometrician?

    <p>Determine factors affecting firms performance</p> Signup and view all the answers

    What is an example of a problem that may be solved by an Econometrician related to finance?

    <p>Measuring and forecasting the volatility of bond returns</p> Signup and view all the answers

    What does applied econometrics involve?

    <p>Using the tools of theoretical econometrics to study some special fields of economics and business</p> Signup and view all the answers

    What are the 3 types of data which econometricians might use for analysis?

    <p>Time series data, cross-sectional data, and panel data</p> Signup and view all the answers

    Which type of data is characterized by being collected at a single point in time?

    <p>Cross-sectional data</p> Signup and view all the answers

    What type of regression could be used to determine the relationship between company size and the return to investing in its shares?

    <p>Cross-sectional regression</p> Signup and view all the answers

    What is the common way to denote each observation in time series data?

    <p>By the letter t and the total number of observations by T</p> Signup and view all the answers

    Which type of data can take on any value and are not confined to specific numbers?

    <p>Continuous data</p> Signup and view all the answers

    In which type of regression would you investigate the effect on a country’s currency of an increase in its interest rate?

    <p>Time series regression</p> Signup and view all the answers

    What type of data has the dimensions of both time series and cross-sections?

    <p>Panel data</p> Signup and view all the answers

    What is an example of continuous data?

    <p>$6.2 ext{%}$ rental yield on a property</p> Signup and view all the answers

    Which one is not a problem tackled using cross-sectional regression?

    <p>The effect on currency with increase in interest rate.</p> Signup and view all the answers

    What is the literal meaning of econometrics?

    <p>The literal meaning of econometrics is 'measurement in economics.'</p> Signup and view all the answers

    What does financial econometrics involve?

    <p>Financial econometrics involves the application of statistical and mathematical techniques to problems in finance.</p> Signup and view all the answers

    What is an example of a problem that may be solved by an Econometrician related to finance?

    <p>Measuring and forecasting the volatility of bond returns is an example of a problem that may be solved by an Econometrician related to finance.</p> Signup and view all the answers

    What does applied econometrics involve?

    <p>Applied econometrics involves using the tools of theoretical econometrics to study specific fields of economics and business, such as the production function, investment function, demand and supply functions, portfolio theory, etc.</p> Signup and view all the answers

    What is an example of continuous data?

    <p>An example of continuous data is the modeling of long-term relationships between prices and exchange rates.</p> Signup and view all the answers

    What are the 3 types of data that econometricians might use for analysis?

    <p>Time series data, Cross-sectional data, Panel data</p> Signup and view all the answers

    Give an example of a problem that could be tackled using a Time Series Regression.

    <p>Determinants of nonperforming loan of Commercial Bank of Ethiopia</p> Signup and view all the answers

    What are Continuous data and Discrete data?

    <p>Continuous data can take on any value and are not confined to specific numbers, while Discrete data can only take on certain values, which are usually integers.</p> Signup and view all the answers

    What is the common way to denote each observation in time series data?

    <p>The letter t and the total number of observations by T</p> Signup and view all the answers

    What type of data has the dimensions of both time series and cross-sections?

    <p>Panel data</p> Signup and view all the answers

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