Question: Q2: (6 pts.) An analyst fits model 1: yi = Bo + B1Xi + B2Xzi + B2Xsi + B2X4i + 6; to a sample of

Q2: (6 pts.) An analyst fits model 1: yi = Bo

Q2: (6 pts.) An analyst fits model 1: yi = Bo + B1Xi + B2Xzi + B2Xsi + B2X4i + 6; to a sample of size n and obtains the fitted values Di = Bo + BIXli + BzXzi + B3X3i + B4X4i through the method of ordinary least squares (OLS). The residuals of model 1 are defined as e; = (yi - yi) and they have the following properties: Eei = EXliei = EXziei = EXsiei = EXdiei = Eviei = 0. After obtaining the fitted values (Vi) from model 1, the analyst fits model 2: yi = Yo + V1Di + 61. Show that the OLS estimates for the unknown parameters of model 2 are given as: Yo = 0 and V1 = 1

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