# Question

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?

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?

## Answer to relevant Questions

The following model was fitted to data from 28 countries in 1989 in order to explain the market value of their debt at that time: y = secondary market price, in dollars, in 1989 of $100 of the country’s debt x1 = 1 if U.S. ...Sharon Parsons, president of Gourmet Box Mini Pizza, has asked for your assistance in developing a model that predicts the demand for the new snack lunch pizza named Pizza1. This product competes in a market with three other ...The data file Britain Sick Leave shows data from Great Britain on the days of sick leave per person (Y), unemployment rate (X1), ratio of benefits to earnings (X2), and the real wage rate (X3). Estimate the model log yt = ...You have been asked to develop a model using multiple regression that predicts the retail sale of beef using time-series data. The data file Beef Veal Consumption contains a number of variables related to the beef retail ...A random sample of 150 residents in one community was asked to indicate their first preference for one of three television stations that air the 5 p.m. news. The results obtained are shown in the following table. Test the ...Post your question

0