Question: Use the data in CEOSAL2 to answer this question. (i) Estimate the model lsalary 5 b0 1 b1lsales 1 b2lmktval 1 b3ceoten 1 b4ceoten2 1

Use the data in CEOSAL2 to answer this question.

(i) Estimate the model lsalary 5 b0 1 b1lsales 1 b2lmktval 1 b3ceoten 1 b4ceoten2 1 u by OLS using all of the observations, where lsalary, lsales, and lmktvale are all natural logarithms. Report the results in the usual form with the usual OLS standard errors. (You may verify that the heteroskedasticity-robust standard errors are similar.)

(ii) In the regression from part (i) obtain the studentized residuals; call these stri

. How many studentized residuals are above 1.96 in absolute value? If the studentized residuals were independent draws from a standard normal distribution, about how many would you expect to be above two in absolute value with 177 draws?

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