FinalExamStudyGuide1.pdf

A multiple linear regression model was fit to data for 10 online stock trading brokerage firms. The variables are logAssets (base-10 logarithm of the firms assets in billions of dollars), logMktShare (base-10 logarithm of the firms percent market share) and logNumAccts (base-10 logarithm of the firms number of accounts in thousands). Regression of logAssets on the other variables gives the following results.

Coefficients: Estimate Std. Error 

(Intercept) -2.237 0.647 logMktShare -0.039 0.357 logNumAccts 1.316 0.317

a) Compute the t-values for logMktShare and logNumAccts. Is either of the corresponding t-tests significant at level 0.05 (two-tailed)?

b) Based on the model above, estimate the log10(Assets in billions) of a firm with a 10% market share (log10(10)=1) and 205 thousand accounts (log10(205)= 2.31).