Question 1 2.5 Bank 1 1 2 2 3 3 Table 1: Bank Profits and Equity Capital Year ROA (%) 2019 4 2020 2019 3 2020 2 2019 1 2020 2 Capital (%) 10 12 9 12 13 11 Table 1 reports data on profitability and capital ratios for three banks in 2019 and 2020. ROA denotes the return on assets and measures profitability. Capital is the ratio of equity capital to assets. Both variables are measured in per cent. a) Using the data in Table 1, estimate the equation ROAit = Bo + B. Capitalit + Eit: b) How would you interpret the coefficient estimates? (1) c) Using the estimates you derived in part a, what is the predicted value of ROAifa bank has a capital ratio of 8%