Question

The S and P 500 is an Index Fund that tracks the largest 500 traded companies in the US. It is

a common investment for most investors, and is used to best describe how the market is
doing. The Table Below shows the yearly opening cost per share every 2 years since 2010.
Year
Cost
1,123.58
1,300.58
1,822.36
1,918.60
2,789.80
3,278.20
2022
4,573.82
Use the data in the table to come up with a Linear Regression Model that best shows this trend
throughout the years. (Use the demos scatter plot and linear regression tool)
Using this model what should the opening price be this coming January 2024?
2010
2012
2014
2016
2018
2020

Answer 1

To come up with a linear regression model, we need to find a line that best fits the data points in the table. This line will allow us to predict the opening price for January 2024.

First, let's plot the data points on a scatter plot. The x-axis represents the years, and the y-axis represents the opening cost per share.

Next, we can use the linear regression tool to find the line that best represents the trend in the data. The linear regression tool calculates the equation of the line in the form y = mx + b, where m is the slope of the line and b is the y-intercept.

Using the linear regression tool, we find that the equation of the line is:

y = 233.324x - 442606.148, where x is the year.

Now, we can substitute x = 2024 into the equation to find the predicted opening price for January 2024:

y = 233.324(2024) - 442606.148.

Calculating this, we find that the predicted opening price for January 2024 is approximately $4,802.26.

Please note that linear regression models make certain assumptions about the data, and it's important to consider other factors that may influence the opening price in January 2024. This prediction is based solely on the linear trend observed in the data points provided.

Explanation: