Question

In: Finance

In the multiple regression model Y = β1 + β2 X2 + β3 X3 + u, variable X3 is given by X3 = a+βX2. What is the value of the estimate of β3?

In the multiple regression model Y = β1 + β2 X2 + β3 X3 + u, variable X3 is given by X3 = a+βX2. What is the value of the estimate of β3?

O It is b².

O It is not defined.

O It is b²βs.

O It is b.

Solutions

Expert Solution

Correct answer is option b.

 

The value that has been estimated to correspond to B3 is the same as the value that has been assigned to the coefficient b in the equation for X3.

 

Explain more

The value that has been estimated to correspond to B3 is the same as the value that has been assigned to the coefficient b in the equation for X3. The coefficient b is the slope of the line that depicts the link between X2 and X3; this slope is expressed as a percentage.

Correct answer is option b.

Umair answered 1 year ago
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