Pay words Q2. The sample regression model r¡ = Bo + Â₁P; + û¡ is estimated using OLS. r is the annual return (expressed in percentage points) on shares of company i and p; is the earnings per share (expressed in pounds sterling) of company i within the same year. For a sample of 100 listed companies, the estimates are Bo= 0.2 and 3₁ = 3.1. The standard errors are 0.15 and 1.2, respectively. 1. Interpret the estimated parameters of the model. 2. Is there evidence that the return depends upon the earnings per share? 3. Might these estimates be biased? Q3. Given the estimation results in question 2: • Do you think the errors would be heteroskedastic in this case? • Describe how you would test for heteroskedasticity in this regression. • Outline the potential consequences of heteroskedasticity in this case and how these consequences could be addressed/remedied. TCAL FICUnctions. On UX MESIumny, mivwanguis