Section 4. C2O points) of HS1300 indes, we estimate the time Where t stands for

Question

Section 4. C2O points) of HS1300 indes, we estimate the time Where t stands for one month. enpirical results are given respectively as follow Coelficient Sad. Eror -State 03542770.148419 24117 0955896 0.018638 51292 0 949819 Mean dependent var 2630.958 ProbF-statisticg)7 Variabie M RE 25238 0 0coodc From the two tables, we conclude that m cve the final model and give the reason why the model is dat (2) Give the reasonable explanation of the final model (3) Sappose the return on Dec. 2016 is-0.06659, wha i the retars on ln a

Explanation / Answer

1) M_REt = 0.354277 + 0.955996 * M_RE( t-1) . Model is this becasue the coefficients are stastically significant.

This is the equation for Linear regression

2) For every increase in prior return by 1 unit, Return at time t increases by 0.955996 . When prior return is 0 , return at time t = 0.354277

3) Return = 0.354277 - 0.06659 * 0.955996 = 0.2906

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