(Requires Advanced material)Maximum likelihood estimation yields the values of the coefficients that
A)minimize the sum of squared prediction errors.
B)maximize the likelihood function.
C)come from a probability distribution and hence have to be positive.
D)are typically larger than those from OLS estimation.

Question

Quizplus · Accepted Answer

Maximum likelihood estimation involves finding the values of the coefficients that maximize the likelihood function, which is a measure of how likely the observed data is given the model and its parameters. This is in contrast to OLS estimation, which minimizes the sum of squared prediction errors. The coefficients estimated through maximum likelihood estimation do not necessarily need to be positive and may or may not be larger than those estimated through OLS estimation.

(Requires Advanced Material)Maximum Likelihood Estimation Yields the Values of the Coefficients