Question: 2. Suppose the model pctstrk = ,3 + [31 funds + g'isktol + 5 satises the OLS assumptions, where pctstck: is the percentage of a

2. Suppose the model pctstrk = ,3\" + [31 funds + g'isktol + 5 satises the OLS assumptions, where pctstck: is the percentage of a worker's pension invested in the stock market. funds is the number of mutual funds that the worker can choose from. and risktoa.' is a measure of risk tolerance (larger riskiof means the person has a higher risk tolerance). Suppose that funds and risktol are positively correlated. Further suppose we ran the simple linear regression pctstck = (1' 1 + (13f midis (a) Will ("i be an unbiased estimate of of the elTect of pctstck'? (b) if it is biased, which way will the bias push our estimate? 3. The following questions deal with inference a) What is the general form of the ttest statistic when H\" : ,(3 = 0? b) Sketch a graph of the sampling distribution of 3 under the assumption that H\" is true. Label the mean value of the sampling distribution. (Note: the graph, does not need to be mad.)

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