Quantitative finance and methods ( masters degree) Statistics Project

Quantitative finance and methods ( masters degree) - Statistics Project Exampleat return on big(p) employed and retained earnings/total assets have a very(prenominal) high correlation (0.6), it would be advisable to remove both of them in order to avoid the puzzle of problem of multicollinearity. Regarding whether to remove either retained earnings/total assets or return on capital employed based on the likelihood ratio tests, it will be on their respective p-values. The wiz with its p-value approaching 1 than the other should be removed, as that implies that it is irrelevant.(e) From the coefficients of the original logistic regression, and ignoring the likelihood ratio tests, is it generally true that firms with a higher current ratio are more belike to go into evacuation? Explain. (6 marks)Firms with a higher current ratio are more likely to go into liquidation. This is because if we were to carry step to the fore a comparative analysis between the original logistic regre ssion and Firm X statistics, it is manifest that the lower the returns of a firm, the higher the current ratio. Furthermore, it is a common knowledge that the firms with lower returns are the ones with the highest possible action if of going into liquidation.since we have concluded that firms with a higher current ratio are more likely to go into liquidation, the p-value must be less than 0.05, which shows that the model is statistically significant at the 95% authorization level.Whether the above two results are statistically significant, at the 95% level of confidence will depend on the p-value generated from the computer. If p-value is less than 0.05, the two results are statistically significant, at the 95% level of confidence.Q2. In evaluating the carelessness risk of bank customers, two approaches are used, namely, multiple discriminant analysis and conventional methods. From a sample of 460 customers, sight results and predicted results of good and bad loans are summaris ed below.Q3. You are working on a research project on capital structure. You