Question
In: Statistics and Probability
Experience (EXP) is positively associated with earnings (EARN), and years of schooling (S) is positively associated...
Experience (EXP) is positively associated with earnings (EARN),
and years of schooling (S) is positively associated with earnings.
Also, suppose that EXP and S not correlated. If a researcher
estimates the regression :
log(EARNINGS) = β1 + β2EXP + u, the estimated
coefficient on b2 will be?
A. unbiased
B. None of these answers are correct.
C. overestimate the effect of EXP on earnings.
D. underestimate the effect of EXP on earnings.
Solutions
orchestra answered 1 year agoRelated Solutions
16、Suppose years of schooling, s, is the only variable that affects earnings. The equations for the...
16、Suppose years of schooling, s, is the only variable that
affects earnings. The equations for the weekly salaries of male and
female workers are given by: wm = 400 + 200s and wf = 200 + 80s. On
average, men have 16 years of schooling and women have 13 years of
schooling. Using these data, calculate the three measures of
discrimination and compare them. Is the discrimination (if any)
serious? Explain.
1. Suppose years of schooling, s, is the only variable that affects earnings. The equations for...
1. Suppose years of schooling, s, is the only variable
that affects earnings. The equations for the weekly salaries of
male and female workers are given by
wm = 550 + 100s and
wf = 400 + 85s.
On average, men have 12 years of schooling and women have 14
years of schooling.
a) What is the male-female average wage differential in levels
in the labor market?
b) What is the male-female average wage differential as a
proportion of the...
Assume that you are interested in estimating the effects of schooling on earnings and that you have individual data on schooling and earnings.
Assume that you are interested in estimating the effects of schooling on earnings and that you have individual data on schooling and earnings.
a) Set up an empirical model that captures the correlation between schooling and earnings and describe this. Why are you likely to overestimate the true effects of schooling on earnings with this model?
b) How would you go about to estimate the causal effects of schooling on earnings if you as a researcher had the authority to...
Assume that you are interested in estimating the effects of schooling on earnings and that you have individual data on schooling and earnings.
Assume that you are interested in estimating the effects of schooling on earnings and that you have individual data on schooling and earnings.
a) Set up an empirical model that captures the correlation between schooling and earnings and describe this. Why are you likely to overestimate the true effects of schooling on earnings with this model?
b) How would you go about to estimate the causal effects of schooling on earnings if you as a researcher had the authority...
4. The cost of retained earnings If a firm cannot invest retained earnings to earn a...
4.
The cost of retained earnings
If a firm cannot invest retained earnings to earn a rate of
return (insert answer here) the required rate of return on retained
earnings, it should return those funds to its stockholders.
The cost of equity using the CAPM approach
The current risk-free rate of return (rRFrRF) is 3.86% while the
market risk premium is 5.75%. The D’Amico Company has a beta of
1.56. Using the capital asset pricing model (CAPM) approach,
D’Amico’s cost...
The cost of retained earnings: If a firm cannot invest retained earnings to earn a rate...
The cost of retained earnings:
If a firm cannot invest retained earnings to earn a rate of
return_______________the required rate of return on retained
earnings, it should return those funds to its stockholders.
The cost of equity using the CAPM approach:
The current risk-free rate of return (rRFrRF) is 4.67% while the
market risk premium is 5.75%. The D’Amico Company has a beta of
0.78. Using the capital asset pricing model (CAPM) approach,
D’Amico’s cost of equity is ______________ ....
4. The cost of retained earnings If a firm cannot invest retained earnings to earn a...
4. The cost of retained earnings
If a firm cannot invest retained earnings to earn a rate of
return __________the required rate of return on retained earnings,
it should return those funds to its stockholders.
The cost of equity using the CAPM approach
The current risk-free rate of return (rRFrRF) is 4.23% while the
market risk premium is 6.17%. The Wilson Company has a beta of
0.78. Using the capital asset pricing model (CAPM) approach,
Wilson’s cost of equity is...
A corporation’s earnings and associated ratios, such as earnings per share, are metrics that investors and...
A corporation’s earnings and associated ratios, such as earnings
per share, are metrics that investors and other stakeholders use
when making decisions. The SEC recently began investigating
corporations for manipulating earnings via rounding errors. In the
early 2000s, it became clear that corporation’s rarely missed
earnings estimates provided by financial analysts. Offer your
opinion on the ethics underlying these practices, any possible
broader implications of such behavior, and any real-life
experiences you may have come across that are similar. See...
Suppose Mandy’s earnings are given by w(S, A) = (SA+1)^(1/2) , where S denotes years of...
Suppose Mandy’s earnings are given by w(S, A) = (SA+1)^(1/2) ,
where S denotes years of schooling and A denotes ability. Assume
that Mandy lives forever, discounts future income at a rate of r,
earns nothing while in school, and supplies labor inelastically
thereafter. Assume that A is exogenous and time is continuous,
Mandy’s objective is to choose S to maximize the present value of
lifetime earnings.
(a) Calculate Mandy’s present value of lifetime earnings.
(b) Find Mandy’s optimal choice...
Suppose X1,···, Xn ∼ Exp(λ) are independent. What is the distribution of X1/S where S =...
Suppose X1,···, Xn ∼ Exp(λ) are
independent. What is the distribution of X1/S where S =
X1+X2+···+Xn?
Please show me how to do this without using the property
of chi-squared dist.
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