In early 2001, US equity marketplaces started trading all listed shares in minimal increments (ticks) of $0.01 (decimalization). After decimalization, bid-ask spreads of stocks traded on the NASDAQ tended to decline. In response, spreads of NASDAQ stocks cross-listed on the Toronto Stock Exchange (TSE) tended to decline as well. Researchers Oppenheimer and Sabherwal (2003) hypothesized that the percentage decline in TSE spreads of cross-listed stocks was related to company size, the pre-decimalization ratio of spreads on NASDAQ to those on the TSE, and the percentage decline in NASDAQ spreads. The following table gives the regression coefficient estimates from estimating that relationship for a sample of 74 companies. Company size is measured by the natural logarithm of the book value of company's assets in thousands of Canadian dollars.
Coefficient Estimates from Regressing Percentage Decline in TSE Spreads on Company Size,
Predecimalization Ratio of NASDAQ to TSE Spreads, and Percentage Decline in NASDAQ Spreads

The average company in the sample has a book value of assets of C$900 million and a
Pre-decimalization ratio of spreads equal to 1.3. Based on the above model, what is the predicted decline in spread on the TSE for a company with these average characteristics, given a 1 percent decline in NASDAQ spreads?

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Coefficient -0.45 0.05 t-Statistic -1.86 Intercept Size; (Ratio of spreads); (Decline in NASDAQ spreads); 2.56 -0.06 -3.77 2.42 0.29 n= 74