Assume that your firm is an importer of Mexican chairs denominated in pesos. Your competition is mainly U.S.producers of chairs. You wish to assess the relationship between the percentage change in its stock price (SPt)and the percentage change in the peso's value relative to the dollar (PESOt). SPt is the dependent variable. You apply the regression model to an earlier subperiod and a more recent subperiod. In the recent subperiod,you increased your importing volume. You should expect that the regression coefficient in the PESOt variable would be _______ in the first subperiod and _______ in the second subperiod.

Question

Assume that your firm is an importer of Mexican chairs denominated in pesos.  Your competition is mainly U.S.producers of chairs.  You wish to assess the relationship between the percentage change in its stock price (SPt)and the percentage change in the peso's value relative to the dollar (PESOt).  SPt is the dependent variable.  You apply the regression model to an earlier subperiod and a more recent subperiod.  In the recent subperiod,you increased your importing volume.  You should expect that the regression coefficient in the PESOt variable would be _______ in the first subperiod and _______ in the second subperiod.

Quizplus · Accepted Answer

The Answer of Assume that your firm is an importer of Mexican chairs denominated in pesos.  Your competition is mainly U.S.producers of chairs.  You wish to assess the relationship between the percentage change in its stock price (SPt)and the percentage change in the peso's value relative to the dollar (PESOt).  SPt is the dependent variable.  You apply the regression model to an earlier subperiod and a more recent subperiod.  In the recent subperiod,you increased your importing volume.  You should expect that the regression coefficient in the PESOt variable would be _______ in the first subperiod and _______ in the second subperiod.

Assume That Your Firm Is an Importer of Mexican Chairs