A study evaluated the results of a two-way ANOVA on the effects of the two facto

Question

A study evaluated the results of a two-way ANOVA on the effects of the two factors-exercise price of an option and the time of expiration of an option-on
implied interest rates (the measured variable). Included in the article is the following ANOVA table.

a)What is meant by Explained in the table, and what is the origin of the
information listed under that source?
b)How many levels of exercise price were used?
c)How many levels of time of expiration were used?
d)How large was the total sample size?

e)Assuming an equal number of data points in each cell, how large was the
sample in each cell?

Source of Variation Degrees of Freedom Sum of Squares Mean Square F-Ratio Exercise prices 2 2.866 1.433 0.420 Time of Expiration 1 16.518 16.518 4.845 Interaction 2 1.315 0.658 0.193 Explained 5 20.699 4.140 1.214 Residuals(Error) 144 490.964 3.409

Explanation / Answer

Explained represents the total variation explained by interaction and treatment effects. It is the num of the first three rows of the table.

There were 3 levels of exercise prices.

There were 2 levels of time of expiration.

Sample size = 144+2+1+1=148

If each cell had equal number of data points, each one had 148/4=37 points

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