Question 1: Answer all parts of this question. D) Indicate whether the following statement is True or False and provided a detailed explanation that justifies your answer: "The predictions from a binary response model have the interpretation of probabilities which are, by construction, bounded between 0% and 100%". [10 marks] ii) Discuss intuitively what is the advantage of using the adjusted R" statistic versus the R', and formally show that the former is a degrees-of-freedom adjusted version of the later. [10 marks] iii) Suppose that you estimate the following regressions to explain the observed variation in the annual salaries of Chief Executive Officers (CEO) across firms 1,...,N: CEO, = B, + B,roe, + 6; CEO = y, +y,roe, +y,rod, + ; Do you expect to obtain /2 = 7, ? Why or why not? [10 marks] iv) Suppose that you have estimated the following two specifications and want to select one for the subsequent analysis. How can you choose between them? Y =B + B,X, + ; In Y, = /+ y, InX, + 6; [10 marks]