Calculate the percentage and test the hypothesis, Econometrics

Assignment Help:

Consider an equation to explain salaries of CEOs in terms of annual firm sales, return on equity (ROE, in percent form), and return on the firm's stock (ROS, in percent form):

Log(salary) = β0 + β1 log (sales) + β2 ROE + β3 ROS +u

a) In terms of model parameters, state the null hypothesis that, after controlling for sales and ROE, ROS has no effect on CEO salary. State the alternative that better stock market performance (higher ROS) increases a CEO's salary.

Assume the following was estimated based on this model from a sample of 209 firms where the standard errors are given in parentheses:

Log(salary) = 4.32+0.280* log(sales) +0.0174*ROE +0.00024*ROS

(0.32)             (0.035)         (0.0041)                            (0.00054)

b) By what percent is salary predicted to increase, if ROS increases by 50 points?

c) Test the hypothesis that ROS has a positive effect. Carry out the test at the 10% significance level.

d) Test the hypothesis that a 1% increase in sales implies a less than 1% increase in CEO salary at the 5% significance level.

 


Related Discussions:- Calculate the percentage and test the hypothesis

Primal and dual lp problems, As in the model solved initially, the followin...

As in the model solved initially, the following is the LP model Maximize Z = $42.13*(x 11 + x 12 + x 13 + x 14 ) + $38.47*(x 21 + x 22 + x 23 + x 24 ) + $27.87*(x 31 + x

Using R to generate results, I have a few econometric that require the use ...

I have a few econometric that require the use of R to generate the answer

Macro econometrics.., (b) Suppose that the initial conditions are as follow...

(b) Suppose that the initial conditions are as follows: y0 = 0 and et = 0 for t= 0. Impose the initial conditions in order to find the general solution.

#title.monopoly, suppose only one professor teaches economics at your unive...

suppose only one professor teaches economics at your university, would you say that this prof is a monopolist who can exact any price from students in the form of readings assigned

Models, when is an econometric model said to be simple and naive

when is an econometric model said to be simple and naive

Find the cost of equity and wacc , Outdoor Travel Inc. needs to estimate th...

Outdoor Travel Inc. needs to estimate the cost of capital for the evaluation of capital expenditures. A typical project is financed with 25% debt-to-value ratio (i.e., D/(D+E) = 0.

Material handling system, what factors affect the choice of material handli...

what factors affect the choice of material handling systems

Stata, Please help me in using Stata

Please help me in using Stata

Elasticity, Assume the price elasticity of cigarettes is 0.25. By how much ...

Assume the price elasticity of cigarettes is 0.25. By how much would prices have to increase to get a 20% reduction on smoking?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd