Faculty of Business and Law

School of Economics, Finance & Accounting

Assignment Brief

Module Title: Introduction to Assignment 1 out of 1

Econometrics Number:
Module Code: 212ECN Assignment Title: Coursework
Assignment 25% of your module mark
Weighting:

Release Date: 23/01/2017 Module Leader: Dr Jacek Niklewski

Submission Friday 10/03/2017
Date/Time: 23:55:00
Submission Online submission
Time and Place: through Turnitin ONLY

Assessment Information

This assignment is designed to assess learning outcomes:

1. Demonstrate an understanding of concepts and tools relevant to econometrics

2. Apply classical econometrics methodology
3. Interpret and analyse statistical results

This assignment is an individual assignment.

This assignment requires you to:

Assignment Brief
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Answer the following questions, providing full details and discussion:

You are asked by the Government to investigate determinants of firm’s shares.

CW2017.gdt file contains cross-sectional data of random 120 companies.

Variable name Description

VALUE The total value of all shares outstanding in millions of GBP

This is calculated as the price per share times the number of shares
outstanding.
SALES The total sales of the firm in millions of GBP

ASSETS The book value of the assets of the firm in millions of GBP

You are expected to use the following log-log models:

Model 1. l_VALUE = f(l_SALES)

Model 2. l_VALUE = f(l_SALES, l_ASSETS)

where l_X represents natural logarithm of X.

Both models should be estimated with a constant.

Present regression output for each of two models above.

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1. Can the l_ASSETS variable be deleted from the 2nd regression?
This requires you to: state the null and alternative hypotheses, determine a critical value
at 10% significance level, calculate the F statistic and present your decision.
[20 marks]

2. Undertake the Ramsey’s RESET test based on squares for the Model 2.
This requires you to: state the null and alternative hypotheses used, determine a critical
value at the 1% significance level; calculate F statistic and present your decision.
[20 marks]

3. Are the residuals from the 2nd regression normally distributed?

This requires you to: state the null and alternative hypotheses, determine a critical value
at 10% significance level, calculate the Jarque-Bera statistic and present your decision.
[20 marks]

4. What is the interpretation of the estimated coefficient for l_ASSETS in the 2nd
regression?
[5 marks]

5. Are the signs of the l_SALES and l_ASSETS estimated coefficients in the 2nd model in
line with the expectations based on the theory? Justify your answer with some academic
references.
[10 marks]

6. How could those models be improved? Illustrate your answer with reference to the
relevant academic literature. 500 words maximum.
[25 marks]

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Criteria for Assessment

 Note that your work must be word processed using Equation Editor or equivalent where appropriate.
 Marks will be deducted if the work is not organised or untidy.
 Provide FULL explanations and details for full credit.

Word Count

The word count is 500 words with respect to question 6.

There will be a penalty of a deduction of 10% of the mark (after internal moderation) for work exceeding the
word limit by 10% or more.
The word limit includes quotations, but excludes the bibliography.

How to submit your assessment

The assessment must be submitted by 23.55:00 on Friday 10/03/2017. No paper copies are required. You can
access the submission link through the module web.

 Your coursework will be given a zero mark if you do not submit a copy through Turnitin. Please take care
to ensure that you have fully submitted your work.
 All work submitted after the submission deadline without a valid and approved reason (see below) will be
given a mark of zero.
 The University wants you to do your best. However we know that sometimes events happen which mean
that you can’t submit your coursework by the deadline – these events should be beyond your control. If
this happens, you can apply for an extension to your deadline for up to two weeks, or if you need longer,
you can apply for a deferral, which takes you to the next assessment period (for example, to the resit
period following the main Assessment Boards). You must apply before the deadline.
You will find information about the process and what is or is not considered to be an event beyond your
control at https://share.coventry.ac.uk/students/Registry/Pages/Deferrals-and-Extension.aspx
 Students MUST keep a copy and/or an electronic file of their assignment.
 Checks will be made on your work using anti-plagiarism software and approved plagiarism checking
websites.

GUIDELINES AND BACKGROUND TO THIS ASSIGNMENT

Plagiarism

As part of your study you will be involved in carrying out research and using this when writing up your
coursework. It is important that you correctly acknowledge someone else’s writing, thoughts or ideas and that
you do not attempt to pass this off as your own work. Doing so is known as plagiarism. It is not acceptable to
copy from another source without acknowledging that it is someone else’s writing or thinking. This includes
using paraphrasing as well as direct quotations. You are expected to correctly cite and reference the works of
others. The Centre for Academic Writing provides documents to help you get this right. If you are unsure,
please visit www.coventry.ac.uk/caw. You can also check your understanding of academic conduct by
completing the Good Academic Practice quiz available on Moodle.

Moodle includes a plagiarism detection system and assessors are experienced enough to recognise plagiarism
when it occurs. Copying another student’s work, using previous work of your own or copying large sections
from a book or the internet are examples of plagiarism and carry serious consequences. Please familiarise
yourself with the CU Harvard Reference Style (on Moodle) and use it correctly to avoid a case of plagiarism or
cheating being brought. Again, if you are unsure, please contact the Centre for Academic Writing, your
Academic Personal Tutor or a member of the course team.

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Return of Marked Work

You can expect to have marked work returned to you within 15 working days for level 1 and 2, 10 working days
for level 3 and M level. If for any reason there is a delay you will be kept informed. Marks and feedback will be
provided online/in class/face to face. Marks will have been internally moderated only, and will therefore be
provisional; your mark will be formally agreed later in the year once the external examiner has completed
his/her review.

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