2:09 pm Wed 10 Nov ., 39% E]. B vuws.westernsydney.edu.au .mtnc mun-pm Not allowed. This test can only be taken once, Force Completion This test can be saved and resumed at any point until the time has expired. The timer will continue to run ifyou leave the test. Your answers are saved automatically. v Remaining Time: 3 hours, 1 0 minutes, 47 seconds. at Question Completion Status: 3"? A Moving to another question will save this response. thstion 22 10 points Save Answer Question 22: (10 marks) A financial analyst investigating the determinants of return on common stocks in the US fits the following model: RRt = B1 + ,8, Growth; + gInflation, + e, where; o RR: real rate of return on common stocks, 0 Growth: output growth, o Inflation: inflation rate. o All variables are in percent form for the period 1954-1981. c The relevant STATA output is presented below. Use the STATA output to answer the following questions. Questions: a. Report the least squares estimates of the coefficients and corresponding p-values. (2 marks) b. Are the signs of these estimates consistent with economic theory? Explain your answer. (3 marks). c. Determine whether the estimated coefficients are statistically significant at the 5% level of significance. (1 mark) d. Is the overall significance of the model at the 5% level of significance? (1 mark) e. Based on part d above, will stimulating output growth or controlling for inflation have an impact on the rate of return? Explain your answer. (2 marks) f. How much of the variation in the real rate of return (on common stocks) does this model explain? (1 mark) 2:09 pm Wed 10 Nov 89% vuws.westernsydney.edu.au Remaining Time: 3 hours, 10 minutes, 41 seconds. Question Completion Status: Variable obs Mean Std. Dev. Min Max RR 28 5.875 20.89837 -37.3 53 Growth 28 3.217857 2.569054 -1.9 6.7 Inflation 28 4.139286 3.070811 -.4 10.8 Source SS df MS Number of obs 28 F (2, 25) 16.73 Model 6749. 45065 2 3374.72533 Prob > F 0. 0000 Residual 5042. 58185 25 201. 703274 R-squared 0. 5724 Adj R-squared 0. 5382 Total 11792. 0325 27 436. 741944 Root MSE 14.202 RR Coef. Std. Err. P>ItI [95% Conf. Interval] Growth 3.943315 1. 293445 3. 05 0.005 1. 279416 6. 607214 Inflation -2.499426 1. 082101 -2.31 0.029 -4. 728055 -.2707959 _cons 3.531812 8. 111369 0. 44 0.667 -13.17387 20.23749 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Open Sans,s... v 10pt V BE EVAVAI