AppliedMultiple choice
You regress fund returns on manager tenure and get a positive coefficient. Fund size is omitted: larger funds return less, and longer-tenured managers run larger funds. Which way is the estimate biased?
- ADownward – the true effect is larger
- BUpward – the true tenure effect is smaller
- CUnbiased, since fund size is not the outcome being regressed on
- DThe direction cannot be determined
The worked solution is in Premium
The answer, the full working and the one idea to take away – for this and all 1,322 questions in the bank. Answer it in practice and your working is marked, with a known mistake named when you make one.
Learn the method
More regression and econometrics questions
- A regression coefficient is 3.Foundation
- You regress y on x and get a slope of 2.Applied
- The tallest fathers tend to have sons shorter than themselves. What does this show?Applied
- You accidentally duplicate every row of your data set and rerun OLS.Applied
- Regressing both ways, part 2 of 3Applied
- You add independent noise to a regressor x. What happens to its coefficient?Advanced