Chapter 2, Exercise Solutions, Principles of Econometrics, 3e16EXERCISE 2.10(a) The model is a simple regression model because it can be written as 12yxe=β +β +where jfyrr=−, mfx, 1jβ =αand 2jβ =β. (b) Firm Microsoft General Electric General Motors IBM Disney Exxon- Mobil 2ˆjb=β1.430 0.983 1.074 1.268 0.959 0.403 The stocks Microsoft, General Motors and IBM are aggressive with Microsoft being the most aggressive with a beta value of 2ˆ1.430β=. General Electric, Disney and Exxon-Mobil are defensive with Exxon-Mobil being the most defensive since it has a beta value
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