Transcribed image text: 2. (3 points) What attractive interpretation does the double-log functional form have for economist? 3. (3 points) Suppose you have 50 years of quarterly data for one product, and impose that the demand or the product is a linear function of a price, income, quarter and year. You wish to test the null hypothesis that ceteris paribus, demand is the same in all years, after controlling for quarter of years (seasonality), price and income. What are the degrees of freedom for the F-test in this case. (RSS R-RSSUR) (RR-R)/ 4. (5 points) Prove that F = RSSUR/o (n-k-1) (n-k-1) (1-RUR/ 5. (5 points) The monthly return to Telstra shares (denoted by T) has mean 0.6 percent and variance 20. The monthly return to Wesfarmers shares (denoted by W) has mean 0.8 percent and variance 20. The covariance between monthly return to Telstra shares and Wesfarmers shares is 5. We form a portfolio by investing 25% of our money in Telstra shares and the remaining 75% in Wesfarmers shares. Denote the monthly return to this portfolio by Z and tell what to expect from this portfolio