Again use the data given in question 44, but this time apply a linear time trend.

Plot the estimates from this regression and from your results in question 44.

Question 44

Suppose you are given the following dividend information for Hamby Corp.
Forecast the dividend for years 6, 7, 8, 9, and 10, using the method you proposed in question 43.

Question 43

Suppose you are an investment analyst and are interested in estimating the future dividend for Hamby Corp. You know that Hamby’s dividends grow at an exponential rate—that is,

where D_t is the dividend in year t, D₀ is the dividend this year, and g is the growth rate of dividends (assumed to be constant). Is there any way to transform this model into a linear regression?

Transcribed Image Text:

Year 0 1 2 3 4 5 D 1.25 1.32 1.37 1.45 1.53 1.60