Quant question #4 of pg. 412. The solution to this question is… TSE Spread = -0.45 + 0.05(ln900,000) - 0.06(1.3) + 0.29(-1.0) = 0.45 so the TSE spread declines by 0.45% for a 1 percent decline in NASDAQ spreads. My question is regarding the ln900,000 figure. The question states that the book value asset equals $900 million. The figure inputted into the equation is 900,000. The reduction of 3 digits seems very arbitrary to me. Using ln900,000 obviously results in a completely different answer than using ln900,000,000. Am I missing something here? or is this just a mistake?
Please read the last line Company size is measured as natural logarithm of … in thousands of Canadian Dollars…
hahaha, my bad, thanks CP.