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Suppose that you are interested in the relationship between the return rate on a stock in 2010 compared to the return rate in 2009.-You believe that the return rates in both years are positively correlated. A sample of 15 stocks'yields the following regression results: b0=5.3, b1= 1.04, sb= 1.79, and MSE = 35.4. 1:79, sb= 0.2163, R2 = 0.64

i. How would you explain the slope coefficient b1?
ii. What is the least squares regression line?
iii. What is the predicted value of y when x = 5
iv. Calculate the error sum of squares.
v. Calculate the total sum of squares.
vi. Calculate the regression sum of squares.
vii. Prepare the analysis of variance table for regression.

User GlennG
by
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1 Answer

6 votes

Explanation:

1. we have b1 = 1.04 which is positive. we say that the return I. 2009 is positively correlated with the return in 2010.

2. Y = b0 + b1X

Y = 5.3 + 1.04X

3. If x = 5

Y = 5.3 + 1.04(5)

Y = 10.5

4. SSE = mse x (n-2)

n = 15, mse = 35.4

SSE = 35.4 x(15-2)

= 35.4 x 13

= 460.2

5. We are to find SST here

R² = SSR/ SSR + SSE

R² = 0.64

SSE = 460.2

0.64 = SSR/SSR+460.2

Cross multiply

0.64(SSR + 460.2) = SSR

0.64ssr + 294.528 = SSR

Collect like terms

294.528 = SSR - 0.64SSR

294.528 = 0.36SSR

SSR = 294.528/0.36

SSR = 818.13

SST = SSR + SSE

= 818.13 + 460.2

= 1276.53

6. The SSR has been calculated to be 818.13

User IsuPatches
by
6.0k points
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