
Explanation:
To calculate the 95% confidence interval for the DB coefficient, we use the formula:
Given values:
The degrees of freedom (df) are calculated as:
For a 95% confidence interval and , the critical -value is approximately 2.021. Calculating the margin of error:
The confidence interval is: 0.27` \pm 0.0586 = (0.2114, 0.3286) $$ This matches Option D.
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Q.73 An analyst believes that the future 15-year real earnings of the S&P 500 are a function of the trailing dividend payout ratio of the stocks in the index (DB) and the yield curve slope (YC). She collects data and obtains the following multiple regression results:
| Coefficient | Standard Error | |
|---|---|---|
| Intercept | −10.8% | 1.567% |
| DB | 0.27 | 0.029 |
| YC | 0.12 | 0.210 |
Calculate the 95% confidence interval for the estimated coefficient for the independent variable DB. (Number of observations = 43)
A
(0.27, 0.3286).
B
(0.2, 0.3).
C
(0.2114, 2.0).
D
(0.2114, 0.3286).
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