The prices (in $) of Rawlston, Inc. stock ( y ) over a period of 12 days, the nu
ID: 3055140 • Letter: T
Question
The prices (in $) of Rawlston, Inc. stock (y) over a period of 12 days, the number of shares (in 100s) of company's stocks sold (x1), and the volume of exchange (in millions) on the New York Stock Exchange (x2) are shown below.
Day
(y)
(x1)
(x2)
1
87.50
950
11.00
2
86.00
945
11.25
3
84.00
940
11.75
4
83.00
930
11.75
5
84.50
935
12.00
6
84.00
935
13.00
7
82.00
932
13.25
8
80.00
938
14.50
9
78.50
925
15.00
10
79.00
900
16.50
11
77.00
875
17.00
12
77.50
870
17.50
?
Excel was used to determine the least squares regression equation. Part of the computer output is shown below.
?
df
SS
MS
F
Significance F
2
118.8474
59.4237
40.9216
0.0000
9
13.0692
1.4521
11
131.9167
?
?
?
Coefficients
Standard Error
t Stat
P-value
118.5059
33.5753
3.5296
0.0064
-0.0163
0.0315
-0.5171
0.6176
-1.5726
0.3590
-4.3807
0.0018
Day
(y)
(x1)
(x2)
1
87.50
950
11.00
2
86.00
945
11.25
3
84.00
940
11.75
4
83.00
930
11.75
5
84.50
935
12.00
6
84.00
935
13.00
7
82.00
932
13.25
8
80.00
938
14.50
9
78.50
925
15.00
10
79.00
900
16.50
11
77.00
875
17.00
12
77.50
870
17.50
Explanation / Answer
SolutionA:
price of stck=118.5059-0.0163(x1)-1.5726(x2)
SolutionB
slope of x1=-0.0163
slope =change in price/change in x1
Fro each share of companys stock sold ,the predicted price decreases by 0.0163 holding volume of exchange constant.
slope of x2=-1.5726
slope of x2=-1.5726
For unit increase in volume of exchange ,the predicted price of the stock decreases by 1.5726 holding x1 constant.
Solutionc:
x2 is linearly related to price since p <0.05
x2 is significnt variable
x1 is not linearly related to price since p=0.6176
and p>0.05
x1 is not significant variable.
Solutiond:
expect the price of the stock to be?
price=18.5059-0.0163(x1)-1.5726(x2)
=118.5059-0.0163*(945)-1.5726*(16)
=77.9408
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