Section 1: True/False, & explain why in two or three sentences:
6. You try to explain the number of IBM shares traded in the stock market per day in 2005. As an independent variable you choose the closing price of the share. This is an example of simultaneous causality.
Now this is an example of simultaneous causality or simultaneous bias as the number of shares traded in a single day depends upon a variety of factors and not only upon the closing factor of the share. Here all the variables that are impacting the number of shares traded in a single day have complex interactions with each other. Here we cannot just use the closing price of the share as the independent variable that is used to estimate the number of trades in a day. If it was that simple then the market would not experience such a high or low as it does and people would not gain or lose money in the stock market so rapidly.
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