TABLE 13-9
It is believed that, the average numbers of hours spent studying per day (HOURS) during undergraduate education should have a positive linear relationship with the starting salary (SALARY, measured in thousands of dollars per month) after graduation. Given below is the Excel output from regressing starting salary on number of hours spent studying per day for a sample of 51 students.
Note: Some of the numbers in the output are purposely erased.
-Referring to Table 13-9, the estimated average change in salary (in thousands of dollars) as a result of spending an extra hour per day studying is
Definitions:
Risk Premium
The additional return above the risk-free rate demanded by investors for taking on a certain level of risk.
Business-Specific
Business-specific refers to elements, strategies, or characteristics that are unique or pertinent to a particular company or industry.
Market Components
The different elements that make up a financial market, including stocks, bonds, currencies, commodities, and derivatives.
Expected Returns
The anticipated return on an investment, estimating the average of probability-weighted returns for a given asset.
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