Question

Step 1

a) an exogenous variable can be defined as a variable whose value is independent of other variables in the system.

if we regress runs on H , it means runs are dependent on H but not the other way round.

Thus, we can conclude that H is an ex0ogenous variable

Step 2

b) if covariance between H and R =0

cov(H,R) = 0

it does not mean that they are independent of each other or there is no causal relationship. they can still be dependent on each other. a nonlinear relation can exist between the two.

answer: no

Step 3

c) exogenous variable is a variable which is independent of other variable in the system.

if we regress runs on X , we are...

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