The following regression model was fitted for an individual with a constant term and three explanatory variables, including the lagged yearly return yt-1 and two other variables, yearly interest rate, x1t, and yearly investments, x2t, for over 10 years.

yn t = 473.8 + 0.95x1t 10.2692

+ 1.26x2t 10.3832

+ 0.3yt-1 10.0832 where yn = yearly return ($ 000)

x1 = yearly interest rate (%)

x2 = yearly investments ($ 000)

a. Test at the 5% level the null hypothesis that the coefficient on x1 against the coefficient yn is positive.

b. Determine a 95% confidence interval for the coefficient on x1 for the entire population.

c. Calculate the total effect of the individual return over all current and future period if the estimated coefficient on x1 increases by $1,000. Interpret your result.