3553
Business Finance
MBA (BE) Programnme
May. 2022
Max Marks: 70
Max Time: 3:30 lHours
Note: Attempt any four questions. All questions carry cqual marks:
"An optimal combination of decisions relating to investment,
maximize the value of the firm to its shareholders." Examine.
Q1. (a)
financing and dividends will
(5)
Q1. (6) A 10 year savings annuity of Rs.2000 per year is beginning at the end of the current year.
The payment of retirement annuity is to begin 16 years from now (The first payment is to be received
at the end of 16 year) and will continue to provide a 20-year payment annuity. If this plan is arranged
through a saving bank that pays interest
yearly retirement annuity
2006 x L
u)
7% per year on the deposited funds. What is the size of the
that will result?
(5)
QI. (c) A deposit carries an interest of 10% per annum with quarterly compounding. The effective
rate of interest would be 40% because you would receive 10% every quarter, four times a year. Is
6)
there anything wrong with the statement? What would be the correct?
Q2. (a) Examine the assumption of re-investment rate with respect to NPV & IRR method. (5)
02. (b) National botling plant is contemplating to replace one of its bottling plant with a new more
efficient plant. The old plant had a cost of Rs10 bilion and a useful life of 10 years. The machine was
does not expects to realize any return from scraping the old
bought 5 years back. The company
machine at the end of 10 years but it it is sold at present to another company in the industry, National
ó billion for it. The new machine has a purchase price of Rs.20
bottling company would receive
value of Rs. 2 billion and has a Useful life of 5 years. The new
billion. It has an estimated salvage
annual sales are expected to increase from 10 billion to 12
machine will have a greater capacity and
billion. Operating efficiencies with the new machine will also produce saving of Rs 2 billion a year.
over a ten year life. The cost of capital is 8% and a 50% tax rate
Depreciation is on straight line basis
Should the company replace the old machine?
is applicable to both revenue and capital gains.
(12.5)
Q3a.
Ltd.
Following in the Balance Sheet MA equipment
(7 10)
Capital& Liabilities
Equity Share Capital
Reserves
10% Debt
Current Liabilities
Amount
Rs.60,000
20,000
Assets
Fixed Assets
Current Assets
80,000
80.000
2,40,000
Amount
1,50,000
90,000
2.40,000
Cost of the firm
The fixed Assets turnover of the firm is 4.The fixed Operating
Rs.1,00,000 and the Variable Costs are 40%. The tax rate is 50%.
Find out
(i) Different Leverages for the firm
(i) Likely level of EBIT if the EPS is (Rs.1.
(tii) Financial break even level
(b) Explain the concept of indifference point of EBIT with a suitable example.
are
Jnt
Djudet
(12.5)
(5)
%000
G000x 2
Q4a.
A company belongs to a risk-class for which the
appropriate capitalization rale is 10%. It
currently has outstanding 25,000 slhares selling al Rs. I00 Cacn. The lirm is contemplating the
ne
declaration of dividend of Rs.5 per share at tne
financial
ena o
currenit
year. The
company cxpects to have a net income Rs.2.5 acs andproposal lor making new investments
ofRs.5 lacs. Show that under the MM assumption's, tne payment of dividend does not affect., t+D
the value of the fim.
040)
(12.5)
1k
Stability of dividend payment has a market bearing on the market price of a share of a
firm." Explain.
(5)
eputatio
5 e f u s
Q5(a). Aries Limited wishes to raise additional finance ol KS.I0 lacs for meeting its investment
plans. It has Rs.2,10,000 in the form of retained carinES
The following are the further details:
available for
investment
purposes,
30%/70%
2.
Debt/equity mix
Cost of debt up to Rs.1,80,000
3.
Eamings per share
Rs.4
4.
50% of earnings
10% (before tax)
16% (before tax)
beyond Rs.1,80,000
.
Dividend payout
Expected growth rate in dividend
6.
Current market price per share
10%
Rs.44
7.
Tax rate
50%
You are required to:
a) To determine the pattern for raising the additional finance.
b) To determine the post-tax average cost of additional debt.
c) To determine the cost of retained
and cost of the equity, and
d) Compute the overall weighted averageearnings
tax
after cost of additional finance.
(12.5)
Q5(b). All successful firms have equity as predominant source of
capital and their market value are
always higher than the firms using debt in the same line of business.
Since the debt has a cost and
has
no
cost the increased amount
equity
equity would bring down the cost of capital and therefore
maximize the value of the firm. Do you agree with the
statement?
S)
06. Q9.On 1s January, 2008 the Board of Directors of Dowell
Co. Ltd. wishes to know the
of working capital that will be
amount
to meet the
required
of activity they have
programme
for the year. The following infomations are
planned
available:
)
ii)
iv)
)
vi)
A vii)
ch Vi)
Ix)
X)
Ki)
XIl)
Issued and paid-up capital
3900
Rs.2,00,000.
5% Debentures (secured on
assets) Rs.50,000.
Fixed assets valued at Rs.1,25,000 on
31-12-2008
Production during the previous year was
60,000 units. It is planned that the level of activity
should be maintained during the
G0000/12 So00 p m
present
year.
The ratios of cost of
selling price are raw materials 60%., direct
wages 10%, and overheads
20%.
Raw materials are
to
expected remain in stores for an average of two
issued for production. AM
months before these are
Each unit of
production is expected to be in process for one month. wIP
Finished goods will
stay in warehouse for
three months. f
Creditors allow credit for 2
from the date of delivery or raw materials.
(AM)
Credit allowed to debtors is months
3 months from the date of
-
approximately
Selling price per unit is Rs.5.
There is
a
regular production
dispatch.
RM, 3
Wog
and sales cycle.
0.S
OH1
Prepareworking capital requirement forecast.
Prolit
0S
(17.5)
CA
183ASo
CL
30000
1337 So
Semester: II
Economics)
Name of the examination: MBA (Business
Subject: Leadership and Organization
There is
a
minutes
Time: 3 hours 30
Maximum mark: 70
Paper Code: 424801207
them,
to
ofsix questions. Candidates need answerfour of
total
and Section lI is
three from Section
the question.
compulsory to answer. The marks are given against
All questio7s
carry equal marks.
Section I
1.
What is
strategic leadership? Distinguish between
statement? Describe about
yourself
the concept of
vision and
a
a mission
that you
the career's vision and mission statement
(3
will draft after you graduate from MBA?
+7+7)
2. Define servant
leadership?
What
are
the
of Servant Leadership? Give
tenants
illustratíon of a suitable Indian leader who possess the
qualities of a
an
servant leader?
3%+7+7)
Peter Senge's five discipline of the learning PELIm poly
learning organization? Explain
Shnt lisi
Team 4oals
to have a learning ex
it
is
important
of
suitable
why
example
organizatíon? Explain with
(3 +7+ 7)
world?
organization in today's competitive corporate
twoMaslow's hierarchy theory of need and Herzberg
What is motivation? Describe
Htnta
3 . What is
4
factor
a
theory? Just say if you
are a
senior manager
supervising
how would you motivate them
unproductive individuals,
specified objective?
and help the organization in achieving its
a
group of below average
to achieve their
or
+7+7)
potentials
(3
given by
culture? The four types of organizational
5. Whatis organizational
Udai Pareek Approach of organizational
the Ouchi Framework and
Sonnenfeld?
culture?
culture
Explain
(3 +4+5 +5)
Section: III
6. Given below is
Julie is
a case
passage. Answer all questions.
computer science engineer who works is a
high-tech corporation where 81% male
dominates the
a
workplace.
She
recently got appointed
grade role and has been told to lead
female. The director of the
a
person.
there is town. But he has
middle
management supervisory
comprising of nine people that includes only one
Kapil is a very successful, liberal and an inclusive
transform the company into a result-oriented culture
not been
to the
best
able to imbibe the
Despite being inclusive Mr. Kapil has been unable to
in various roles the
inclusive
a
team
company Mr.
He has been able to
in
good cultural values in the company.
provide equal opportunities for women
organization has to offer and it has been a drawback for him
despite his
policies for the organization. Julie a qualified and
experienced manager was made
the leader of a
group and
higher position.
members had difficulties in
accepting and
This is also because the
employees were so
centric culture that it
was
the group Mrs. Rai would
unique
for them to take orders
listening to a woman in
acquainted and adapted to a male
from a lady. Then the only lady in
support her occasionally just because she
the other hand is older than Julie
but junior in position
too
has
is
a
woman.
Mrs. Rai
on
grudges of not having
why Mrs. Rai sometimes plays a diplomatic role
and remains indifferent. All these while Mr.
Kapil has been observing the day-to-day
activities from quite some time and has not unable to
provide a valuable solution to the
her
being promoted.
some
And that is the reason
problem. Of the group only Mr. Raj, who is a senior in the group and who works under Julie
Supports the importance of gender minority in the organization. Mr. Sonu the new recruit is
in
probation
for
a
period of six months and is just learning the organizational culture. Due to
higher authority, Julie has gone to a state of
all the differences and lack of
support from
depression and unable to perform to her full potential.
1.
T
l
y
Explain the style of leadership Mr, Kapil possess in the case?
nis ot
Do you think he is
having a
wrong style of leadership for the organízation? If yes/no please elaborate on the style of
leadership?
(3.5)
Cerli
2.
Do you think the
lack of proper diversity
management
is
responsible
for the
problems
Julie is facing?
(3.5)
3.
Is the fault with the organizational culture or with the employees that Julie has to face
such situations?
Ca
na ho.rau
Maske
Humat
(3.5)
causc
4.
Based
on
the
case
if you
were
a new recruit like Mr. Sonu, what would be your course of
cu se
action?
TIPoliua
setl
3.5)
wsio
5. Justify the lack of competence in leadership role in the case? Give a suitable title to the
case
OnhunIead
eed
back
e d
L o
3+ 4)
3S53
MBA
(BE) II Sem. May 2022
-
Business Economics-Course 424801203
Paper Name: Firms,
Markets and Public
Policy
Maximun Marks: 70
Time: 3 hours 30 minutes
four
Instructions: Answer any
questions
carry
given below. All
questions from the six questions
marks.
equal
firms to co-ordinate
does it make sense to allow
perspective,
policy
a
From
public
1. a.
their R&D efforts?
the
research in the context of
of the COVID I19 vaccine
Discuss the experience
b.
above.
Discuss the
below and
b. Analyze the data given
industries.
Income
Industry
Book Publishing
Artificial Jewellery
Soaps and Detergents
Price
Elasticity
Elasticity
2.2
-0.8
-3.0
0.66
-0.76
-1.5
Gold Jewellery
Cold Drinks
Wine
advertising in imperfect competition.
in the given
comment on advertising intensity
possible effects of persuasive
1.79
1.68
2.0
0.41
-1.48
-0.68
several varieties of products.
Businesses often offer
Mashe pac lih
conduct.
this type of market
A.
Write short notes on the following:
a) Principal-Agent Problem
6) Concentration Ratio and
c) Resale
5.
Price
Advertising Elasticity of
Demand
Short Run
Long Run
0.25
0.28
0.15
0.35
0.31
0.284
0.294
0.57
0.97
0.59
0.20
1.2
Describe the
possible reasons for
m
0rtsunce
muakeh
brrd
shaue
cen
rofion
etonms o
stalt
Valo
Ads
HHI
Maintenance
and complete
3-stage game of perfect
that players I and 2 play a dynamic,
2 moves second,
between L and R. Player
information. Player I moves first, choosing
chooses between a and b.
final stage, player I
between L' and R'. In the
Assume
choosing
Their
payoffs are as follows:
L-L'-a (l,0)
R-L'-a (0.0)
L-L'-b(2,1) L-R-a (1,3)
R-L'-b(2,2) R-R:a (1,0)
L-R'-b(0,1)
R-R'-b(2,1)
Note that the first number in parentheses is the payoff for player 1, and the second
number is the payoff for player 2.
a. Describe this game with a game tree.
b. Use backwards induction to identify the unique SPNE to this game.
c. Explain the concept of"Infinite Regress."
d. Explain the concepts of "perfect information" and "complete information."
6.
"Although price wars occur in equilibrium, no firm cheats in equilibrium." Explain this
statement.
lien
DEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
(BE) PROGRAMMME II SEMESTER- MAY, 2022
Paper Name :Macroeconomic Analysis and Policy
Paper No: 424801201
MBA
Time: 3 hour 30 minutes
Maximum Marks: 70
(Attempt any4 questions. All questions carry equal marks).
1. (a)Discuss the role of the banking system in the US financial crisis, explain the amplification mechanims that
were instrumental in its spread and outline any two policy measures adopted by the government to deal with
this crisis.
(6) Money supply can become endogenous in an economy with fixed exchange rates. Explain. Mention any 2
reasons
countries choose
to adopt a fixed exchange rate regime. (10+7.5)
2. (a) Compare and contrast the efficacy of fiscal policy under fixed and flexible exchange rates under perfect
capital mobility.
Or,
(a) Use the 3-equation model to evaluate the likely impact of and appropriate policy response to a permanent
demand shock.
(6) What is the theory ofPurchasing power parity ? What does it imply about the relation between exchange
rates and inflation rates ? (10 +7.5)
3. (a) The Corona pandemic threatened to push economies into a deflation trap. Use the apparatus ofthe3
equation model to explain the policy options and constraints faced by governments in such a situation.
(b) Write a short note on the Paradox of Thrift and comment on the difference in the role of savings in the
short run vis a vis the long run.
Or,
(b) Explain why governments tend to opt for Monetary accommodation of fiscal policy. (12 + 5.5)
4.
(a) Suppose an economy is described by the following functions: C= 50 + 0.8Yd; I= 70; G = 200; TR =
100; t 0.2. Calculate the equilibrium level of income, the multiplier and the government's budget surplus in
this model. Suppose that the tax rate t increases to 0.25. What would be the new equilibrium income, new
multiplier and change in the budget surplus? Comment on the differences between the initial and new
situations.
(b) What do you understand by the Covered and Uncovered Interest Parity conditions ? What do they imply
regarding the relation between interest rates and exchange rates ? (10+ 7.5)
5. (a) Use the Solow model to bring out the relative importance of the savings rate and technological progress for
long run economic growth.
Or,
(a) In a closed economy suppose the government decides to reduce transfer payments (e.g, cut unemployment
dole) but increases government purchases of goods and services by an equal amount, would equilibrium
income rise or fall as a result of this change? Give reasons and check your answer with the following example
Initially MPC =0.8, t = .25 and Y = 600 and afterthe change dG = 10 and dTR = -10 (where MPC=Marginal
propensity to consume;, t = tax-rate; Y = GDP; dG and dTR represent change in govemment expenditure (G)
and transfer payments (TR) respectively), In the example find the change in equilibrium income and in the
budget surplus and explain why the budget surplks changed.
6) Define the Wage Setting and Price Setting relations and use the WS-PS framework to explain the shape of
the Phillips curve (PC) and reasons for shits in the PC.(10 + 7.5)
6. (a) Use the Central Bank's loss function to compare and contrast Inflation Averse, Unemployment Averse and
Balanced Cetral Banks and explain the derivation of the MR curve.
6) Current account deficits may be good or bad depending on its source. Do you agree ? Discuss, with
reference to possible causes and means offinancing current account deficits. (12 +5.5)
Page 1 of 1
3558
International Economics
MBA (BE)-1I Semester Examination 2022(May)
Paper Title: International Economics
Paper code: 424801202
Time: 3hours 30mimutes
Total Marks: 70
Attempt any 4 questions.
Q.1
Part 1)
Use the
All
questions carry equal marks
information in the table below to answer
the
following questions
Production of per unit of labor:
U.S
Wheat
Rice
(a) Doe either
(b) What is the
(c) What is the
Argentina
300
alw
20
100
20
country
absolute
in the
production of wheat or Rice? Explain.
opportunity cost of wheat advantage
in each country?
opportunity cost of rice in each country?
(d) Analyze comparative
advantage and opportunities for trade between the U.S.
and Argentina.
have
an
Part 2) Production of
per unit of labor:
U.S
Wheat
Argentina
200
Rice
20
100
80
(a) Does either country have an absolute
in the
production of wheat or rice? Explain.
(b) What is the opportunity cost of wheat advantage
in each
country?
What
is
(c)
the opportunity cost of rice in
each country?
(d) Analyze comparative
and
advantage
Q2. Consider the table and
|Country
0.6 Pound/ hr
which commodity?
b)What would be the pattern
Cloth
Wine
| lhr/ unit
2hr/ unit
equivalent to one pound.
exchange rate, which country has
Given exchange rate is one
dollar
a) If trade is possible at above
Argentina.
following questions;
Wage rates
I Dollar/hr
U.S.A
England
answer
opportunities for trade between the U.S. and
3hr/ unit
4hr/ unit
comparative cost advantage in
of trade if the exchange rate is Ipound/
1.25 dollar?
il
c)What are the limits to the wage ate in each country? Whal will happen to pattern of trade
the wage limit is broken, justily your answer using the above information
rate limit
d) What are the exchange rate limits? Whal will happen to pallem of trde if exchange
is broken, justily your answer by using from above infomation
Q.3 a) Will free trade and perfect competition lead to an equalization of waye rate
internationally? Explain. Why the wage vate largely vary between developing and developed
countries, in the same sector in a real world situation, even after the ndoption of free trade?
Q.4 a) Why are increasing returns
to
scale and fixed
costs
imporlant
in models
of international
trade with inmperfect competition?
b) There is no economic rationality behind the export subsidy, Prove!
Q.5 Home's demand curve for wheat is
D
100-20P; and Is supply curve is S=20+ 20 P
Foreign demand curve is D* = 80 -
20P; and a supply curve
$t = 49 +201P
a) Derive and graph Home's and foreign's importdemand sehedule and export supply eurve
countries
and the price of wheat in the absence of trade in both
b) If trade is there between home and foreign, at zero transportation eost, whal is the world
price? And what is the volume of trade?
c) Home levies a
specifictariffof0.5 on wheat imporis, Deiermine the price, 4uantily of
wheat demanded and supplied in each country and volume of Irade.
d)
Show
graphically and calculate the term of trade gain, efficiency loss,
on welfare of the tariff
Q.6 Write Short notes on following;
a) Offer Curve
b) Dynamic Learning Curve
c) Immiserizing Growth
t
Po
d) National Welfare Arguments against Free Trade. p
and the total effeet
355%
MBA (BE) Il Sem, - May 2022
Business Economics--Course 424801204
Paper Name: Environmental Economics
Maximum Marks: 70
Time: 3 hours and 30 minutes
Instructions: Answer any four of the six questions given below. All questions
carry equal marks.
help of a diagram. explain
equilibrium price and output levels.
(a)
With the
how
a
negative externality creates a
focus of the Paris Agreement is lowering
and
review. Each party commits to declare a
of pledge
determined contribution" or NDC. Discuss.
(b) The main
distortion in
greenhouse gas emissions by a system
plan of climate action-its "nationally
2. Commen on any two of the following:
approach in Extended
(b) Weak and Strong Sustainability
(a)
Cradle-To-Grave
Producer
Responsibility
(c) Tragedy of the Commons
3. Answer the following:
"planning stage" is considered
(a) During the environmental audit process.
i diu
Explain.
mpornant stage. Do you agree?
as
the
only
Economie Values that can be derived from the
(b) Jdentify and explain the different types of
Amazon rain forest.
U.c
tye
4.(a) "The carbon budget cannot be modified
to
suit the desires
of humans; it is a
fundamental feature of the way the Earth works. Once the carbon budget has been 'spent,"
then net emissions must be held to zero from that point onward in order to avoid exceeding
the temperature target." Discuss.
(6) Nauru is small Pacific Island nation. In 1900 phosphate was discovered on Nauru, and
today as a result of just over 90 years of phosphate mining, about 80% of the island is totally
devastated. At the same time, the people of Nauru have had over the past several decades one
of the highest per capita incomes in the world. An examination of the causes of Nauru's
current situation and the future prospects for that country illuminates the interdepcndenl
relationships among markets, ceosystems and human wel-being. Comment.
5. Although the primary objective of the CDM is to stimulate emission reductions in
developing countries while giving developed countries some economic flexibility to meet
their targets, the CDM also has another objective-to promote sustainable devclopment and
the transfer of cleaner technologies to developing countries. Discuss.
6. (a) In some instances, consideration of "Iransaction costs" alone could make internalising
an externality (positive or negative) economically indefensible. Provide three concrete
examples of this.
(b) "The National Environment Policy (NEP), 2006 was an effort towards India's
commitment to clean environment and making positive contribution to international efforts.
The NEP builds on the various earlier policies which had addressed the challenges of
environment and need of sustainable development prior to this policy." Do you agree?
Explain.
3553
DEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
2022
MBA (BE) PROGRAMMME II SEMESTER -MAY,
Paper No: 424801206
Paper Name: Basic Econometries
Maximum Marks: 70
Time: 3 hour 30 minutes
(Attempt any 4 questions. All questions carry equal marks).
Ql.
o-)
Omitted Variables Bias; (ii) Dummy
(a) Explain with examples the following concepts (i)
Variable Trap.
duridt
R
(6) Explain how you would cary out any one test for Heteroskedasticity. &otdeis a function of her
her
pension
C) It is known that the amount an employee contributes towards
However, individual
made
the
contribution
employer.
the
by
and
matching
salary, age
data on firm level
with
was run
employee data is not available and the following regression
he
averages for 150 firms
Y=a+Pix +Bzxa + B»xs tu,
average amount contributed by employees of the firm
Xaverage age of employees in the firm
Xaverage salary of employees in the firm
Famount per employee paid by the firm
u
) What is the variance of the error term in this model ?
(ii) Data on the number of employees in each firm is ni, where I=
Where, Y
1,... 150. Explain how this
can be used to correct the problem of heteroscedasticity in this model.
(ii) Mention any one problem that might arise if this problem is ignored.
(33,4,23,2.5)
Q2. Considerthe following
Source|
regression results:
df
SS
Number of obs =
MS
Residual
4898262.67
15273849.3
Total
20172112.0
Model
2
46
2449131.34
Prob> F
332040.202
R-squared
49
SIn
F ,9=
=
0.0017
=
0.2428
Adj R-squared =
48
ISalary
Coef.
Std. Err.
ISales
Roe
651.5859
37.78687
200.3094
cons
346.4558
13.6906
405.5214
420252.332
yk
Root MSEE
RSS
P>t|
3.253
2.760
0.854
0.002
0.008
0.397
[95% Conf. Interval]
248.384
10.22912
1054.788
65.34462
-469.8165
1162.728
(a) Find above the results of a regression using a cross-section data of 49 companies where log of
CEO salaries was regressed on 2 measures of firm performance: log of Sales and Return on
equty (measured in percentage). Interpret the estimated cocfficients and comment on their
statistical significance.
6) Find the value and degrees of freedom of the F-statistic and interpret the result,
o Find the values ofthe Adjusted R-squared and Root MSE. (mean squaned enor)
(d) This regression covers two types of firms, 29 Financial Firms and 20 Manufacturing Firms.
State how you would use a dummy variable and carry out a Chow test for the hypotheses that
the relation between firm performance and CEO salary is different for these two types of firms.
Specify the model and give details of how the hypothesis test would be carried out (include
details of the restricted and unrestricted models, distribution and degrees of freedom of the test
statistic).
(4, 4, 3.5, 6)
Page 1 of 4
Q3.Consider the following
Ya+ PixI + Pxa model:
+
Pxy 4u,
a
otherwise
XI
Dummy variable which takes the value 1 ifa credit card application is accepted and 0,
Annual Income
Amount
X3Ago
of total outstanding loans and morlgages
aHow would you interpret the estimated coefficients from
n t this model violates at least one OLS assumptionthis
andmouo
mention how would you address
this problem.
Osing data on output (Y),
labour (L) and capital (K), explain how you
would use OLS
gression to estimate the Cobb-Douglas production
function Y ALK° and test the
hypothesis
(d) Consider theof increasing returns to scale (i.e., atb> 1).
following Regression models:
Model 1: Y=a+
=
+Pzx2 +B»x tu,
Model 2:Y =a*+ pixi
+v
B1*xl
how you would
EXplain
interpret the coefficient of xI
can the
cocfticient of xl be the same in
in Models I and 2. Under what conditions
Models I and 2? Give reasons for your
answer.
4,4,5, 4.5)
Q4.
(a)
A student
is
studying the
individuals with a MBA relation between Business school ranking and starting
degrec. Data is available for starting salaries,
salary ot
marks of S00
students
and
gender
with
along
the ranks of
ranked from 1 (the
Graduation
top B-school) to 50 (the the Business schools they attended (B-Schools
lowest
dummy variables to formulate a
ranked B-school). Explain how he can use
(6) Consider the
interpret the
C) Define serial
d) What is
following
regression model for this study.
Finite Distributed
Lag model: y a +õox
following coefficients 8 (i=0,1,2) and (60 ô1 t
+ôix t1 +ôX 12 u and
correlation' and explain any one method to test o2).
for first order serial
? How does it
Multicollinearity
one method
affect the
correlation.
of the
for
problem.
=
t
t+
checking for the presence of
properties
OLS
estimators
Multicollinearity and one possible remedy Outline
for this
?
(4,4,4.5, 5)
Q5.
(a)
A researcher has 30
observations of two
X=Y+2, he regressed Yon X, then find thevariables Y and X, They have a relationship like
valueof
() Intercept and slope coefficients
(i) Standard errors of the coefficients
(i) Coefficient of determination
SSTR)
R
Justify your calculations/answer?
(b) Researcher is running the model:
Expenditure
families, the result of the regression is
=
Bo + B Income, he has the data for 20
3
Page 2 of 4
SS
Source
20
Number of obs
MS
df
6741. 83
F(1, 18)
0.0000
6459287.31
6459227.31
Model
Residual
953.091186
12
13 2S. 6 413
Prob
F
O1113
R-squared
0.9972
Adj R-squared
30.953
340870.155
19
6476532.95
Total
Root MSE
[95
Std.
Coef.
expenditure
.0120031
income
82.11
0.000
-2.29
0.035
t
-32.88421
con3
Conf.
Intervalj
P>]t
Erxr.
uySe (,)
2013
result?
values in the above
meaning? Justity.
Find the missing
of intercept have any
value
the
Does
coefficients?
Interpret the
Confidence Interval
R-squared?
coefficients using
(i) Interpret the
and intercept
approaches
testing for slope
Do the three
P-Value approach.
iv) Conduct hypothesis
and
significance approach
approach, Level of
results?
same
give you the
i)
i)
X
coefficient of regressing
is Bronx and slope
it
then do you think
coefficients we get 1,
on x
(c)
regressing y
slope coefficient of
multiply these two slope
Y isBxonY. lf we
Y on X or X on Y, Justify.
Suppose
on
matters
if we
regress
[(2+1+1)+(3+2+1+5) + (2.5)1
Q6.
statements are
true
or
false
whether the following
then regress y
(a) Justify
independent variable (x),
of dependent (y) and
value
the
double
determination. *
(i) If we
coefficient of
coefficient and
we
(i)
get the
same
Regression done
slope
on
standardized
intercept.
(ii) if we
run
the regression: y
=
Po
on x
without
be the regression
variables, will always
+ Hi, than
R
=
0 and
estimator
of Po will show the
average of yi.
(b)
Given the
following
variable),
variable) and x (independent
plots of y (dependent
and find
coefficients
interpret the
functional forms of the model,
scatter
suggest the appropriate
the respective model.
the slope and elasticity of
Page 3 of 4
00
(i)
c) We have cross sectional data for Yand Xvariables, we regressed Yon X using the following
model
Model A: InY = P% + B,X
Model B: Y =Po +nX
() Do you think the interpretation of both the models are same? Justify
(i) Can we compare the Rs of both the models? Justify
(2x3)+(4+4) +(2+1.5)]
Page 4 of 4