clear all
set obs 5
set seed 28011806
forvalues i=1/100 cfw_
g binom`i'=rbinomial(1,0.5)
collapse _all
g i=1
reshape long binom, i(i) j(rep)
hist binom
g mean=0.5
g var=(0.5*0.5)/5
g st_binom=(binom-mean)/sqrt(var)
twoway (hist st_binom) (function y=norm
Econ210 Problem Set 4 Suggested Solutions
Winnie van Dijk
Updated: November 19, 2014
1.
SW 6.9
Note that what we have called omitted-variable bias is actually an inconsistency
(see the formula on p. 182 in SW). Under the given assumptions, there will be n
Mark Egan
Econometrics A Problem Set 3 Solutions
SW 4.4 a)
We can write the return of the stock as
R Rf = (Rm Rf ) + u
Taking the variance of both sides yields
V ar(R Rf )
=
V ar(Rm Rf ) + u)
=
2 V ar(Rm Rf ) + V ar() + 2Cov(u, Rm Rf )
u
=
2 V ar(Rm Rf