4) (20 points, 4 points for each piece.) Compare the following two regressions E

Question

4) (20 points, 4 points for each piece.) Compare the following two regressions Equation i. is exactly the regression we've been working with thus far, so all the formulas we've derived thus far apply immediately. In equation ii all the values of the independent variable in the sample have been multiplied by 4. How does this change, if at all, the values of A.P, SST, and r? For the sake of clarity, please denote the OLS values for equation ii with a *, and compare them to the "regular" OLS estimates we derived in class.

Explanation / Answer

The coefficient of regression equation multiplied by 4 will effect in increase of slope of the reregression line. r which is directly proportional to coefficient will increase by a factor of 4 while the intercept will remain unchanged as will be SST

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