The following model is used to explain whether a firm is tak

The following model is used to explain whether a firm is taken over by another firm during a year: P(TAKEOVER = 1|X) = phi(beta 0 avgprofit + beta 1 market value + beta 2debt + beta 3ceosalary + beta 4ceoage) State the Null hypothesis that, other factors being equal, variables related to CEO have no effect on the probability of takeover. How many df are in the Chi-square distribution for the LR or the Wald test?

Solution

null hypothesis: beta1=beta2= beta3

no. of df\'s in chi-sq distribution for the LR or wald\'s test= 3 - 1 =2