1. Suppose that you have following data:VariableDescriptionCEO salary measured in thousands of $Firm's sale measure in millions ofSReturn on equity in percentSalarysalesroe*Return on equity is a measure of financial performance calculated by dividing netincome by shareholders' equity.Your estimated regression is given bylog (salary) = 4.322 + 0.276 log(sale) + 0.0215roe - 0.0008roe?, R = 282, n = 209.(324) (0.033)(0.0129)(0.00026)a) Is the effect of all independent variables statistically equal to 0?b) Interpret the coefficient on log(sale).c) Interpret the effect of roe on log(salary).• Without more information, your interpretation of the effect of roe onlog(salary) should include answers to these sub-question.Should the roe be included in this model?il.Comment on relationship between roe and log(salary): is it U-shaped or inverseU-shaped?What is the turning point? How would you interpret this point?Plot log(salary) vs roe.v.ii.iv.Compute predicted value of log(salary) for roe-10, roe-11, roe-20, roe-21,roe-30, and roe-31 while holding other factors constantd) Find the differences in predicted log(salary) when roe increases by 1% going from 10to 11; when roe increase by 1% going from 20 to 21; and when roe increases by 1%going from 30 to 31.e) Suppose that you have F-statistics for the following F-tests1. Ho:B+21B2 = 0; F = 6.71ii. Ho: B, + 41Bz = 0; F = 19.31il. Ho:B + 61ßz = 0; F = 22.54.Use this information to calculate the 95% CI for the differences in predicted value oflog(salary) from part d. Where is the Cl widest. What does this tell you about the effectsof roe on log(salary)?

AS PER THE GUIDELINE I HAVE SOLEVD FIRST THREE SUBPARTS. PLEASE POST OTHE QUESTIONS SEPRATELY.

1. Suppose that you have following data: Variable Description CEO salary measured in thousands of $ Firm's sale measure in millions of $ Return on equity in percent Salary sales roe *Return on equity is a measure of financial performance calculated by dividing net income by shareholders' equity. Your estimated regression is given by log (salary) = 4.322 + 0.276 log(sale) + 0.0215roe-0.0008roe", R = 282, n = 209. (324) (0.033) (0.0129) (0.00026) a) Is the effect of all independent variables statistically equal to 0? b) Interpret the coefficient on log(sale). c) Interpret the effect of roe on log(salary).

1. Suppose that you have following data: Variable Description CEO salary measured in thousands of $ Firm's sale measure in millions of $ Return on equity in percent Salary sales roe *Return on equity is a measure of financial performance calculated by dividing net income by shareholders' equity. Your estimated regression is given by log (salary) = 4.322 + 0.276 log(sale) + 0.0215roe-0.0008roe", R = 282, n = 209. (324) (0.033) (0.0129) (0.00026) a) Is the effect of all independent variables statistically equal to 0? b) Interpret the coefficient on log(sale). c) Interpret the effect of roe on log(salary).

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 2E

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