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The following table contains the return on equity (in percentage) of four rms and the salary (in thousand of dollars) of their CEOs. Firm No.

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The following table contains the return on equity (in percentage) of four rms and the salary (in thousand of dollars) of their CEOs. Firm No. Return on Equity (%) CEO Salary ($k) 1 13.8 1368 2 20.0 1145 3 16.4 1078 4 5.9 578 Denote, for rm i (i = 1, . . . , 4), the return on equity (in percentage) as 3:;- and the CEO salary (in thousand dollars) as yi. We have following observations: ($1,311) = (13.8, 1368), ($2,192) = (20.0,1145), ($3,113) = (16.4,1078), ($4,114) = (5.9, 578). We Wish to fit a linear function y = rm + 3, with (77%,?) minimizing the sum of squared errors (SSE) f(m,c) =(ma:1 + c m)2 + (mmz + c y2)2 + (mm + c 1J3)2 +(m:1:4 + c y4)2. You may assume that f (m, c) has a minimum point. (a) The first~order conditions for stationary point(s) can be rewritten as a system of linear equa~ A m = 125735.65 c 8338 for some 2 x 2 coefcient matrix A to be worked out. Report the value of matrix A. No tions in form of explanation is needed. (b) Multiply both sides of the equation above by A1 to solve the rstorder conditions derived in (a). Report the values of m and Erounded to 4 decimal places. No explanation is needed

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