Can someone please help me with this? I need to do a regression in order to estimate the alpha's in this following equation, but I can't seem to get this equation to be in a format that i could use regression with.Ii was just looking to simplify this equation so that I can get something in the form of Y = constant + alpha0 * something + alpha1 * something .. etc so that the regression coefficients will be my alphas.
Any advice would be greatly appreciated, thanks a lot! D(T) stands for the balance at time T, and R(T) stands for the interest rate at time T.
D(T) = D(0) * exp[alpha0 * T + alpha 1 * T^2 / 2 + Alpha 3 * (R(T) - R(0))] * ((1 / df(T)) ^ Alpha3
where df(T) = exp(summation from i to N of - R(TI) * dTI) (so df(T) is basically a constant number)