Using your answers from part (b) and your answer from part (d), calculate by hand an...

Transcribed Image Text:

Using your answers from part (b) and your answer from part (d), calculate by hand an approximation of the parameter estimate on the variable profits from simple regression SALARY₁ = ß0 + ß, PROFITS;+ ε₁. e) Showing your work, what is your estimate of ß, ? b) What is the covariance between salary and profits? . estat vce Covariance matrix of coefficients of regress model e(V) profits profits .00241804 _cons -1.6937438 _cons 6927.076 d) What is the interpretation of the parameter estimate on the variable profits? This parameter means that for every dollar that CEOs get in salary, company profits go up by $0.41. Using your answers from part (b) and your answer from part (d), calculate by hand an approximation of the parameter estimate on the variable profits from simple regression SALARY₁ = ß0 + ß, PROFITS;+ ε₁. e) Showing your work, what is your estimate of ß, ? b) What is the covariance between salary and profits? . estat vce Covariance matrix of coefficients of regress model e(V) profits profits .00241804 _cons -1.6937438 _cons 6927.076 d) What is the interpretation of the parameter estimate on the variable profits? This parameter means that for every dollar that CEOs get in salary, company profits go up by $0.41.

Answer rating: 100% (QA)

Okay here are the calculations to estimate 1 from a simple regression of SALARY1 on PROFITS ... View the full answer