Question: The following model was fitted to data on 90 German

The following model was fitted to data on 90 German chemical companies:
where the numbers in parentheses are estimated coefficient standard errors and
y = share price
x1 = earnings per share
x2 = funds flow per share
x3 = dividends per share
x4 = book value per share
x5 = a measure of growth
a. Test at the 10% level the null hypothesis that the coefficient on x1 is 0 in the population regression against the alternative that the true coefficient is positive.
b. Test at the 10% level the null hypothesis that the coefficient on x2 is 0 in the population regression against the alternative that the true coefficient is positive.
c. The variable X2 was dropped from the original model, and the regression of Y on (X1, X3, X4, X5) was estimated. The estimated coefficient on X1 was 2.95 with standard error 0.63. How can this result be reconciled with the conclusion of part a?



Sale on SolutionInn
Sales0
Views78
Comments
  • CreatedJuly 07, 2015
  • Files Included
Post your question
5000