25. The following model was fitted to data on 32 insurance companies: 9 = 7.62 - 0.16r + 1.23x R= 0.37 (0.008) (0.496) where ý = price-earnings ratio X = size of insurance company assets, in billions of dollars x = dummy variable taking the value 1 for regional companies and 0 for national companies The numbers in parentheses under the coefficients are the estimated coefficient standard errors. a. Interpret the estimated coefficient on the dummy variable. b. Test against a two-sided alternative. the null hypothesis that the true coefficient on the dummy variable is 0. c. Test, at the 5% level, the null hypothesis B, = B2 = 0, and interpret your result.
25. The following model was fitted to data on 32 insurance companies: 9 = 7.62 - 0.16r + 1.23x R= 0.37 (0.008) (0.496) where ý = price-earnings ratio X = size of insurance company assets, in billions of dollars x = dummy variable taking the value 1 for regional companies and 0 for national companies The numbers in parentheses under the coefficients are the estimated coefficient standard errors. a. Interpret the estimated coefficient on the dummy variable. b. Test against a two-sided alternative. the null hypothesis that the true coefficient on the dummy variable is 0. c. Test, at the 5% level, the null hypothesis B, = B2 = 0, and interpret your result.
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:25. The following model was fitted to data on 32 insurance companies:
9 = 7.62 - 0.16xi + 1.23x2 R = 0.37
(0.008) (0.496)
where
9 = price-earnings ratio
XI = size of insurance company assets, in billions of dollars
x2 = dummy variable taking the value I for regional companies and 0 for national companies
The numbers in parentheses under the coefficients are the estimated coefficient standard errors.
a. Interpret the estimated coefficient on the dummy variable.
b. Test against a two-sided alternative. the null hypothesis that the true coefficient on the
dummy variable is 0.
c. Test, at the 5% level, the null hypothesis B, = B2 = 0, and interpret your result.
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