Figure:
Suppose That in the Course of Testing Whether Salary $\text { Pooled }$

question 21

Multiple Choice

Figure:
Suppose that in the course of testing whether salary functions differ for males and females,you estimate the pooled and male and female results in Figure 6.4. $\text { Pooled }$

$\begin{array}{l}\text { ANOVA }\\\begin{array}{lccccc}\hline & d f & S S & M S & F & \text { Significance } F \\\hline \text { Regression } & 4 & 2.30931 \mathrm{E}+12 & 5.77328 \mathrm{E}+11 & 282.1787278 & 1.2198 \mathrm{E}-215 \\\text { Residual } & 4286 & 8.76901 \mathrm{E}+12 & 2045965635 & & \\\text { Total } & 4290 & 1.10783 \mathrm{E}+13 & & & \\\hline\end{array}\end{array}$


$\text { Male }$

$\begin{array}{l}\text { ANOVA }\\\begin{array}{lccccc}\hline & d f & S S & M S & F & \text { Significance } F \\\hline \text { Regression } & 4 & 1.54309 \mathrm{E}+12 & 3.85772 \mathrm{E}+11 & 131.8489492 & 9.4649 \mathrm{E}-101 \\\text { Residual } & 2136 & 6.24964 \mathrm{E}+12 & 2925860190 & & \\\text { Total } & 2140 & 7.79272 \mathrm{E}+12 & & & \\\hline\end{array}\end{array}$

$\text { Female }$

$\begin{array}{lccccc} \text { ANOVA }\\\hline& \text { of } & S S & M S & F & \text { Significance } F \\\hline \text { Regression } & 4 & 6.15055 \mathrm{E}+11 & 1.53764 \mathrm{E}+11 & 153.1758618 & 2.2255 \mathrm{E}-115 \\\text { Residual } & 2145 & 2.15323 \mathrm{E}+12 & 1003838471 & & \\\text { Total } & 2149 & 2.76829 \mathrm{E}+12 & & &\\\hline\end{array}$
Figure 6.4
-The tests statistic for the Chow test in Figure 6.4 is

• A)0.0436.
• B)9.327.
• C)18.654.
• D)37.307.

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Definitions:

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to gauge investment risk.

Expected Earnings

The forecasted income of a company, often estimated by analysts based on historical data and future projections, indicating potential future profitability.

Miller Model

A theory on dividend policy developed by Merton Miller, which considers the impact of taxes and bankruptcy costs on a company’s optimal capital structure.

MM Model

Modigliani-Miller Theorem; a foundational concept in corporate finance that proposes, under certain market conditions, the valuation of a firm is unaffected by its capital structure.