Question: 65 SUMMARY OUTPUT Dependent Variable: Boeing Monthly Return Hegression

Question

Question: 65 SUMMARY OUTPUT Dependent Variable: Boeing Monthly Return Hegression Stotistics R Square Adjusted R Square Standard Error 0.5204 .2708 0.2696 0.08 623 ANOVA MSF Significonce E 1.53 230.59 0.000 621 622 153 0.01 4.12 5.65 Total Upper 95% 0.01 tStar P-value Lower 95% Coefficients 0.01 Standard Error 2.32 0.0206 0.00 0.00 0.08 15.19 0.0000 1.00 1.29 1.14 S&P Monthly Return An asset manager performs a regression analysis of Boeing's monthly returns against the monthly returns of the Standard and Poor's 500 (S&P 500), a stock market index of 500 large companies. Since the financial market is so volatile, the asset manager decides that it is nearly impossible to foreca st exactly what Boeing's monthly returns will be and therefore asks the team to provide a ge of possible monthly returns for Boeing. The manager wants to cover as many potential outcomes as possible and asks the team to construct a 99.7% prediction interv regression output below, prediction interval for Boeing's monthly returns, assuming that the S&P 500 monthly returns by 3%? Note that percentages are represented as values between 0 and 1. ran al. Given the which of the following options is a reasonable estimate of the 99.7% decline

Explanation / Answer

So we can see from the analysis that the regression equation will be formed as

Boeing's Monthly Return = 0.01 + 1.14 * S&P Monthly Return----(eq1)

Now we need to find the S&P montly return with 99.7% confidence to estimate the range of return for Boeing

So here we need to look the z table and from the z table we find that z=-/+3 for area under the normal distribution curve to be 99.7%

So from z=-3 till z=+3 the area under the normal curve is 99.7%

now using the z formula z= (Xbar-mu)/std error

where we have mu=3% we need to estimate Xbar with sd = 0.08

-/+3= (Xbar-0.03)/0.0008

Xbar= 0.0276 to 0.0324

now sunstituting the above values in eq 1 we get

Boeing's Monthly Return(Lower end) = 0.01 + 1.14 * 0.0276 = 0.041464

Boeing's Monthly Return(Upperend) = 0.01 + 1.14 * 0.0324= 0.046936

So the 99.7% conf interval for Boeing's Monthly Return is 4.15% to 4.69%

Hope the above answer has helped you in understanding the proble. Please upvote the ans if it has really helped you. Good Luck!!

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.