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The document contains two sample exam questions from a quantitative methods for finance course. The first question asks students to analyze a regression model estimating term GPA. It asks students to identify statistically significant variables, test hypotheses about coefficients, and test for joint significance of variables. The second question asks students to consider how correlations between independent variables in a multiple regression model would affect estimates of the coefficient for a key variable compared to a simple regression omitting other variables. It asks students to predict whether coefficient estimates would be similar or different under varying conditions of correlation and effect size.

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754 views2 pages

Exam

The document contains two sample exam questions from a quantitative methods for finance course. The first question asks students to analyze a regression model estimating term GPA. It asks students to identify statistically significant variables, test hypotheses about coefficients, and test for joint significance of variables. The second question asks students to consider how correlations between independent variables in a multiple regression model would affect estimates of the coefficient for a key variable compared to a simple regression omitting other variables. It asks students to predict whether coefficient estimates would be similar or different under varying conditions of correlation and effect size.

Uploaded by

April Kim
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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The Hashemite University Department of Finance and Banking Quantitative methods for finance Dr. Ahmad Y.

Khasawneh Sample Questions of Mid-term Exam ========================================================================

1) The following equation was estimated for the fall and second semester students: ( trmgpa = -2.12+.900)crsgpa+ .193)cumgpa+.0014)tothrs 2trmgpa __(.55)_(.175)crsgpa(.064)cumgpa(.0012)tothrs 2tr mgpa __ [.55]_[.166]crsgpa[.074]cumgpa[.0012] +.0018)sat -.0039)hsperc+.351)female - .157)season _ (.0002)sat _(.0018)hsperc _(.085)female _(.098)season _ [.0002]sat _[.0019]hsperc _[.079]female _[.080]season n = 269, R2= .465. trmgpa is term GPA, crsgpa is a weighted average of overall GPA in courses taken, cumgpa is GPA prior to the current semester, tothrs is total credit hours prior to the semester, sat is SAT score, hsperc is graduating percentile in high school class, female is a gender dummy, and season is a dummy variable equal to unity if the students sport is in season during the fall. The usual and heteroskedasticity-robust standard errors are reported in parentheses and brackets, respectively. a. Do the variables crsgpa, cumgpa, and tothrs have the expected estimated effects? Which of these variables are statistically significant at the 5% level? Does it matter which standard errors are used? b. Why does the hypothesis H0: crsgpa = 1 make sense? Test this hypothesis against the two-sided alternative at the 5% level, using both standard errors. Describe your conclusions. c. Test whether there is an in-season effect on term GPA, using both standard errors. Does the significance level at which the null can be rejected depend on the standard error used? d. Test whether the explanatory variables are jointly significant at the 5% level. Is any explanatory variable individually significant?

2) Suppose that you are interested in estimating the ceteris paribus relationship between y and x1. For this purpose, you can collect data on two control variables, x2 and x3. (For concreteness, you might think of y as final exam score, x1 as class attendance, x2 as GPA up through the previous semester, and x3 as SAT or ACT 1

~ score.) Let be the simple regression estimate from y on x1 and 1 let be the multiple regression estimate from y on x1,x2,x3. 1 a) If x1 is highly correlated with x2 and x3 in the sample, and x2 and x3 have large partial effects on y, would you expect ~ to be similar or very different? Explain. and 1 1 b) If x1 is almost uncorrelated with x2 and x3, but x2 and x3 ~ tend to be similar or are highly correlated, will and 1 1 very different? Explain. c) If x1 is highly correlated with x2 and x3, and x2 and x3 ~ have small partial effects on y, would you expect se( ) or 1 se( ) to be smaller? Explain. 1

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