3. Case:

a. You are trying to understand the performance of Indian stock market in relation with the

performance of Indian Economv. If vou are to prepare a simple muth-variate regressior

model to study the above relationship, how would you prepare the model? Discuss the

list of variables, its relevance and source of data for the above analysis.

b. In the above analysis, if you were to analyse whether there is a presence of a month of the year effect in Indian Stock Market, how would you modify the analysis using a dummy variable? Discuss the concept of dummy variable trap and how you could avoid that in the current analysis.