Two new​ variables, the market value of the firm​ (a measure of firm​ size, in millions of​ dollars) and stock return​ (a measure of firm​ performance, in percentage​ points), are added to the​ regression: ModifyingAbove ln (Earnings )with caret equals 3.86 minus 0.28 Female plus 0.37 ln (MarketValue )plus 0.004 Return(Earnings)=3.86−0.28Female+0.37ln(MarketValue)+0.004Return​, ​ (0.030.03​) ​ (0.040.04​) ​ (0.0040.004​) ​ (0.0030.003​) n​ = 46,670, Upper R overbar squared R2 ​= 0.345. If MarketValue increases by 4.644.64​%, what is the increase in​ earnings

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Answer:

Explanation:

If Market Value increases by 4.64%, then earnings increase by:

㏑(Earnings)  = 0.37 × ㏑(4.64)

                      = 0.37 × 1.534714

       Earnings = Exp (0.56784418)

                      = 1.76%

If Market Value increases by 4.64%, earnings increase by 1.76%

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