You have just graduated from Hofstra University and have taken a job as research associate at a major investment bank. Your first assignment is to estimate the compensation for a sample of randomly selected CEOs. You plan on using standard regression estimation techniques.

1. Write your own linear model (i.e. equation) specifying two independent variables.

2. Explain your rationale for using those two factors.

3. Add a third factor that has a non-linear effect. Why do you expect it to have a non-linear effect? Write the model below.

4. Add a fourth factor that is a dummy, i.e. qualitative variable. Explain its hypothesized impact.

5. What is diagnostic checking? Why is it important for economic modeling?

You have just graduated from Hofstra University and have taken a job as research associate at a major investment bank. Your first assignment is to estimate the compensation for a sample of randomly selected CEOs. You plan on using standard regression estimation techniques.

1. Write your own linear model (i.e. equation) specifying two independent variables.

2. Explain your rationale for using those two factors.

3. Add a third factor that has a non-linear effect. Why do you expect it to have a non-linear effect? Write the model below.

4. Add a fourth factor that is a dummy, i.e. qualitative variable. Explain its hypothesized impact.

5. What is diagnostic checking? Why is it important for economic modeling?

You have just graduated from Hofstra University and have taken a job as research associate at a major investment bank. Your first assignment is to estimate the compensation for a sample of randomly selected CEOs. You plan on using standard regression estimation techniques.

1. Write your own linear model (i.e. equation) specifying two independent variables.

2. Explain your rationale for using those two factors.

3. Add a third factor that has a non-linear effect. Why do you expect it to have a non-linear effect? Write the model below.

4. Add a fourth factor that is a dummy, i.e. qualitative variable. Explain its hypothesized impact.

5. What is diagnostic checking? Why is it important for economic modeling?

You have just graduated from Hofstra University and have taken a job as research associate at a major investment bank. Your first assignment is to estimate the compensation for a sample of randomly selected CEOs. You plan on using standard regression estimation techniques.

1. Write your own linear model (i.e. equation) specifying two independent variables.

2. Explain your rationale for using those two factors.

3. Add a third factor that has a non-linear effect. Why do you expect it to have a non-linear effect? Write the model below.

4. Add a fourth factor that is a dummy, i.e. qualitative variable. Explain its hypothesized impact.

5. What is diagnostic checking? Why is it important for economic modeling?