Statistics homework help. Predictive Analytics
Midterm Exam II
Instructions:
This exam contains five sections. Each section is worth 20 points. You have 48 hours to complete your exam.
Your answers must be typed. Make sure to highlight your final answer.
Section I
Consider this DGP: � = �$�%
&�(, where � is a random variable such that �~�(0, �0).
1. Explain how you would estimate this model. (15 points)
2. Find the estimators for the parameters. (5 points)
Section II
Consider this DGP: � = �(�) + �, where �~�(0, �0), and you ignore the functional form of the determining
function �.
1. Explain how you would estimate this model. (15 points)
2. How would you employ this model to predict the impact of a change in � by 1 unit on a change in �. (5
points).
Section III
A colleague of yours wants to estimate a DGP that presents multicollinearity. Explain to your colleague the
challenge of this task and advise him on what he can do in this case. (20 points)
Section IV
Consider this DGP: � = �$ + �%�% + �0�0 + �, where �~�(0, �0). A colleague wants to estimate this DGP by
regressing on this equation: � = �$ + �%� + �.
1. Explain to your colleague what will be the consequence of this estimation. (15 points)
2. Find the value of �7�8
%9. (5 points)
Section V
Consider this DGP: � = �$ + �%�% + �0�0 + �, where �[�] = �[��%] = �[��0] = 0, but you ignore what kind
of distribution follows the random variable �.
1. Can you estimate the parameters of the DGP? (5 points)
2. Can you construct the confidence interval of �%? (5 points)
3. Can you test the null hypothesis �% = 0? (5 points)
4. Assume you find that �8
% = 0. What does this finding tell you about the DGP? (5 points)

Statistics homework help