问题如下：
Epstein asks Litvenko whether it is possible to identify companies that are likely tooutperform the market in the next period rather than just trying to predict the returnfor a company.The most appropriate way to address the outperformance issue discussed byEpstein and Litvenko is to:
选项：
A. use a probit model.
B. add a dummy variable to the regression.
C. replace one or more of the independent variables with its logarithmictransformation.
解释：
A is correct. A probit model is appropriate for a binary decision, such as whether a securityis likely to outperform the market or not.
B is incorrect. A dummy variable is a qualitative independent variable. A model toclassify outcomes as binary requires a qualitative dependent variable.
C is incorrect. A logarithmic transformation of an independent variable is appropriatewhen its relationship with the dependent variable is non-linear, but it will not changethe form of the dependent variable to binary (outperforms or does not).
