To Explain Personal Consumption (CONS) Measured in Dollars, Data Is $$\hat { Y } = 2.28 - 0.29 \text { CRDTLIM + } 5.77 \text { APR + } 2.35 \text { ADVT + } 0.39 \text { SEX }$$

question 95

Multiple Choice

To explain personal consumption (CONS) measured in dollars, data is collected for INC: personal income in dollars
CRDTLIM: $1 plus the credit limit in dollars available to the individual
APR: mean annualized percentage interest rate for borrowing for the individual
ADVT: per person advertising expenditure in dollars by manufacturers in the city where
The individual lives
SEX: gender of the individual; 1 if female, 0 if male
A regression analysis was performed with CONS as the dependent variable and CRDTLIM, APR,
ADVT, and GENDER as the independent variables. The estimated model was $$\hat { Y } = 2.28 - 0.29 \text { CRDTLIM + } 5.77 \text { APR + } 2.35 \text { ADVT + } 0.39 \text { SEX }$$ What is the correct interpretation for the estimated coefficient for GENDER?

• A) Holding the effect of the other independent variables constant, mean personal consumption for females is estimated to be $0.39 higher than males.
• B) Holding the effect of the other independent variables constant, mean personal consumption for males is estimated to be $0.39 higher than females.
• C) Holding the effect of the other independent variables constant, mean personal consumption for females is estimated to be 0.39% higher than males.
• D) Holding the effect of the other independent variables constant, mean personal consumption for males is estimated to be 0.39% higher than females.

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Definitions:

European Option

A type of financial derivative that gives an investor the right, but not the obligation, to buy or sell an asset at a specified price on the option's expiration date.

Warrant

A financial instrument that gives the holder the right, but not the obligation, to buy a company's stock at a specific price before a certain date.

Convertible Bond

A financial instrument that can be transformed into a certain number of the issuer's shares at various points in its existence, most often per the discretion of the individual possessing the bond.

Putable Bond

A type of bond that gives the holder the option to require the issuer to repurchase the security before its maturity date at a predetermined price.