THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 244

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
Suppose you are interested in determining the factors that influence the time required to prepare a tax return.You develop the model Y = β₀ + β₁X₁ + β₂X₂ + β₃


+ β₄X₃ + β₅X₄ + β₆(X₁ ∙ X₄) + ε,where Y is the amount of time in minutes,X₁ is the income of the individual (in thousands of dollars),X₂ is the age of the individual,X₃ is the number of people living in the household,and X₄ is a dummy variable that takes the value 1 if the individual owns his or her own home.After interviewing 40 accountants,you obtained
= 17.2 + 0.38x₁ + 1.04x₂ - 0.04
+ 2.15x₃ + 0.11x₄ - 0.22(x₁ ∙ x₄),
= 5.3,
= 0.13,
= 0.33,
= 1.51,
= 4.7,
= 0.05,and
= 0.07.
-Test the hypothesis H₀ : β₁ = 0 and interpret your result.

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Definitions:

Stock Price

The cost of purchasing a share of a company, which fluctuates based on demand and supply in the market.

Constant Annual Dividend

A dividend payment that a company commits to distribute to its shareholders at a steady rate each year.

Rate of Return

An indicator of the financial success or failure of an investment, calculated by dividing the profit (or loss) by the investment’s initial cost.

Dividend Amount

The total sum of money paid to shareholders, typically expressed on a per-share basis, from a corporation's earnings.