In a study of the infuence of financial institutions on bond interest rates in a

Question

In a study of the infuence of financial institutions on bond interest rates in a certain county, quartenty data over a period of 12 years were analyzed The post yP e, where y,is the change over the quarter in the bond interestrates. , is the change over the quarter in bond purchases byfinancal instutions, and xg, is th change over the quarter in bond sales by financial institutions. The estimated regression coefmicents are b,-0043 and b2-0061. Interpret these estimates. What is the correctinterpretaion of the coeficent estimates? Seled the correct choice below and,if necessary,il in the answer boxes within your choice OA Each addmional bond purchased by tinanca instutions leads to a changein the estmated bond interest rates by percent Each adational bond sale by t insthutions leads to a change in the estimated bond interestrates by percent O B. Eadh percent increase in the bond interest rates leads to a change in the estimated amount of bonds purchased by financial instutions byand a decrease in bond sales by financial instutions by o c. There is no meaningful interpretation of the regression coedients for this application

Explanation / Answer

Option A is Correct

Each additonal bond Purchase leads to change in interest rate by 4.3%

and Each additonal bond sale by instittion leads to change of -6.1%

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