i)Apply RESET from equation to the model estimated in Computer Exercise. Is there evidence...

i)Apply RESET from equation to the model estimated in Computer Exercise. Is there evidence of functional form misspecification in the equation?

(ii) Compute a heteroskedasticity-robust form of RESET. Does your conclusion from part (i) change?

y = β0+ β1x1+… + βkxk+δ12 + δ23+error.

In Problem 4.2, we added the return on the firm’s stock, ros, to a model explaining CEO salary; ros turned out to be insignificant. Now, define a dummy variable, rosneg, which is equal to one if ros _ 0 and equal to zero if ros _ 0. Use CEOSAL1.RAW to estimate the model

Discuss the interpretation and statistical significance of3.