a) Treating the rate of return of the index as the explanatory variable, X, use

Question

a) Treating the rate of return of the index as the explanatory variable, X, use technology to determine the estimates of P0 and P1.
The estimate of P0 is_______
The estimate of P1 is_______
b) determine the P-value for this hypothesis test.
P-value is_______
c) Assuming the residuals are normally distributed, construct a 90% confidence interval for the slope of the true least-squares regression line.
Lower bound:______
upper bound:______
d) What is the mean rate of return for the company stock if the rate of return of the index is 3.25%?
The mean rate of return for the company stock if the rate of return of the index is 3.25% is_______ Rate of Return Rates of return of the Month Rates of return of the company stock, y index, x 4.33 3.38 Apr 07 5.09 3.35 May-07 Jun-07 0.54 1.78 2.88 3.20 Jul-07 Aug 07 2.69 1.29 7.41 3.58 Sept-07 483 Oct-07 1.48 4.40 Nov-07 Dec-07 0.86 dr Jan-08 6,12 3.48 Feb-08 Print one

Explanation / Answer

The statistical software output for this problem is:

Simple linear regression results:
Dependent Variable: y
Independent Variable: x
y = 1.2321253 + 0.76478103 x
Sample size: 11
R (correlation coefficient) = 0.66485999
R-sq = 0.4420388
Estimate of error standard deviation: 3.223176

Parameter estimates:

Parameter estimates:

Analysis of variance table for regression model:

Predicted values:

Hence,

a) Estimate of P0 is 1.2321

Estimate of P1 is 0.7648

b) P - value is 0.0256

c) Lower bound = 0.2398

Upper bound = 1.2898

d) 3.7177

Note - I have rounded all the values to 4 decimal places. Please round off accordingly as mentioned in the question.

Parameter Estimate Std. Err. Alternative DF T-Stat P-value Intercept 1.2321253 0.98352766 0 9 1.2527612 0.2419 Slope 0.76478103 0.28640965 0 9 2.6702348 0.0256

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