Concept explainers
Buy-side vs. sell-side analysts’ earnings forecasts. Refer to the Financial Analysts Journal (July/August 2008) comparison of earnings forecasts of buy-side and sell-side analysts. Exercise 12.90 (p. 741). Recall that the professors used regression to model the relative optimism (y) of the analysts’ 3-month horizon forecasts as a
- a. What null hypothesis would you test to determine whether the quadratic terms in the model are statistically useful for predicting relative optimism (y)?
- b. Give the complete and reduced models for conducting the test, part a.
- c. What null hypothesis would you test to determine whether the interaction terms in the model are statistically useful for predicting relative optimism (y)?
- d. Give the complete and reduced models for conducting the test, part c.
- e. What null hypothesis would you test to determine whether the dummy variable terms in the model are statistically useful for predicting relative optimism (y)?
- f. Give the complete and reduced models for conducting the test, part e
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Statistics for Business and Economics (13th Edition)
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