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Business, 25.11.2021 05:30 cynone8254

Problem 2 (8 points): You are doing a regression analysis on stock data, which consists of a companies' stocks measured at 20 quarterly intervals over the last five years. Each observation consists of the stock price and the dividends paid per share during that month. a (2 points). You want to know if the stock price grows faster when firms pay higher dividend rates. Write down a model that allows you to estimate the effect of increasing the dividend rate on the growth rate of the stock price. Note that a dividend rate is the percentage of earnings paid as dividends to stockholders, and is generally chosen by firms, while the total amount of dividends paid generally increases over time as firms grow.

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