A factor associated with the widespread adoption of algorithmic trading is increased:
A. market efficiency.
B. average trade sizes.
C. trading destinations.
C is correct.
Global financial markets have undergone substantial change as markets have fragmented into multiple trading destinations consisting of electronic exchanges,alternative trading systems, and so-called dark pools.
In such an environment,when markets are continuously reflecting real-time information and continuously changing conditions, algorithmic trading has been viewed as an important tool.
If an omitted variable is correlated with variables already included in the model,coefficient estimates will be biased and inconsistent and standard errors will also be inconsistent. Is this Statement correct?
B. No, because the model’s coefficientestimates will be unbiased.
C. No, because the model’s coefficientestimates will be consistent.
A is correct.
Changis correct because a correlated omitted variable will result in biased andinconsistent parameter estimates and inconsistent standard errors.