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

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

Econometric project assistance needed, HI, I am currently working on my eco...

HI, I am currently working on my econometrics assignment which requires me to replicate the result of a published paper. I have been given the same data set as the paper therefore

Multicollinearity, if there is multicollinearity so why we can not estimate...

if there is multicollinearity so why we can not estimate the value of parameters?

The Role of Labor, Which of the following is an example of derived demand?

Which of the following is an example of derived demand?

Estimate the earn average , (a) Estimate how much more or less workers on a...

(a) Estimate how much more or less workers on average earn when they work for government as opposed to private sector, holding their characteristics constant. Interpret the finding

Ethical problem in dependent variable, The attached Eviews results are for ...

The attached Eviews results are for a model who has a professional career (dependent variable = pro (1 if respondent has a professional career, 0 otherwise). The data is the 1979 c

Game theory, Students in the red/black card game had to make individual dea...

Students in the red/black card game had to make individual deals. How would the situation change if they could bargain collectively?

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