Question: Given the multi-index model Where I1 and I2 are correlated, and given the regression equation I*2 = 1 + 1.3I1 + dt, transform the equation

Given the multi-index model

Where I*1 and I*2 are correlated, and given the regression equation I*2 = 1 + 1.3I1 + dt, transform the equation for Ri into one with orthogonal indexes.

Ri = 2 + 1.14"+1.21: + C:

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