# Question: 1 Write the estimated regression equation predicting leverage L based

1. Write the estimated regression equation predicting leverage (L) based on shareholder rights (R).

2. Carry out a statistical test for the existence of a linear relationship between the two variables.

3. The reported r2 value was 16.50%. Comment on the predictive power of the regression equation linking a firm's leverage with the strength of the rights of its shareholders.

A study was undertaken to assess the relationship between a firm's level of leverage and the strength of its shareholders' rights. The authors found that firms with more restricted shareholder rights tended to use higher leverage: they assumed more debt. This empirical result is consistent with the theory of finance.

The regression resulted in an intercept estimate of – 0.118 and a slope estimate of - 0.040. The t-statistic value was – 2.62, and the sample size was 1,309.

2. Carry out a statistical test for the existence of a linear relationship between the two variables.

3. The reported r2 value was 16.50%. Comment on the predictive power of the regression equation linking a firm's leverage with the strength of the rights of its shareholders.

A study was undertaken to assess the relationship between a firm's level of leverage and the strength of its shareholders' rights. The authors found that firms with more restricted shareholder rights tended to use higher leverage: they assumed more debt. This empirical result is consistent with the theory of finance.

The regression resulted in an intercept estimate of – 0.118 and a slope estimate of - 0.040. The t-statistic value was – 2.62, and the sample size was 1,309.

## Relevant Questions

1. Carry out the regression and find the β for the stock. What is the regression equation? 2. Does the value of the slope indicate that the stock has above-average risk? (For the purposes of this case assume that the risk ...For the regression you performed in problem 11-39, produce and interpret the Durbin-Watson statistic. A study was reported about the effects of the number of hours worked, on average, and the average hourly income on unemployment in different countries.3 Suppose that the regression analysis resulted in SSE = 8,650, SSR = ...In the Nissan Motor Company situation in problem 11-21, suppose that a new variable is considered for inclusion in the equation and a new regression relationship is analyzed with the new variable included. Suppose that the ...Give 95% confidence intervals for the slope parameters β2 through β5, using the information in Table. Which confidence intervals contain the point (0, 0)? Explain the interpretation of such outcomes.Post your question