Briefly describe the criterion used to obtain the ordinary

Question

Problem

I. Briefly describe the criterion used to obtain the ordinary least square estimator.

II. When estimating a regression in a sample why is a large sample observations preferred to a small sample?

III. State the assumption(s) under the classical linear regression model giving rise to a biased standard error of the coefficient estimates when violated.

IV. There are two regressions:

r_t=a+br_M,t+u_t                             (1)
r_t=c+dr_M,_t+eVol_t+v_t                    (2)

where rt is stock returns, rM,t is market returns, and Volt is market volatility. State the null hypothesis if regression (1) is nested in regression (2).