PLEASE ANSWER ONLY PARTS C AND F (No excel or calculations needed, just explanat

Question

PLEASE ANSWER ONLY PARTS C AND F (No excel or calculations needed, just explanations)

(a) Develop a multiple linear regression model to predict Wal-Mart revenue, using CPI, Personal Consumption, and Retail Sales Index as the independent variables.

(b) Plot the residuals against the predicted values and comment on what you see.

(c) Does it seem that Wal-Mart’s revenue is closely related to the general state of the economy?

Identify and remove the four cases corresponding to December revenue.

(d) Develop a multiple linear regression model to predict Wal-Mart revenue, using CPI, Personal Consumption, and Retail Sales Index as the independent variables.

(e) Plot the residuals against the predicted values and comment on what you see.

(f) Does it seem that Wal-Mart’s revenue is closely related to the general state of the economy?

(g) Comparing the results of parts (a) and (d), which of these two models is better? Use R-square values, adjusted R-square values, Significance F values, p-values and other appropriate criteria to explain your answer.

Date Wal Mart Revenue CPI Personal Consumption Retail Sales Index December 11/28/2003 14.764 552.7 7868495 301337 0 12/30/2003 23.106 552.1 7885264 357704 1 1/30/2004 12.131 554.9 7977730 281463 0 2/27/2004 13.628 557.9 8005878 282445 0 3/31/2004 16.722 561.5 8070480 319107 0 4/29/2004 13.98 563.2 8086579 315278 0 5/28/2004 14.388 566.4 8196516 328499 0 6/30/2004 18.111 568.2 8161271 321151 0 7/27/2004 13.764 567.5 8235349 328025 0 8/27/2004 14.296 567.6 8246121 326280 0 9/30/2004 17.169 568.7 8313670 313444 0 10/29/2004 13.915 571.9 8371605 319639 0 11/29/2004 15.739 572.2 8410820 324067 0 12/31/2004 26.177 570.1 8462026 386918 1 1/21/2005 13.17 571.2 8469443 293027 0 2/24/2005 15.139 574.5 8520687 294892 0 3/30/2005 18.683 579 8568959 338969 0 4/29/2005 14.829 582.9 8654352 335626 0 5/25/2005 15.697 582.4 8644646 345400 0 6/28/2005 20.23 582.6 8724753 351068 0 7/28/2005 15.26 585.2 8833907 351887 0 8/26/2005 15.709 588.2 8825450 355897 0 9/30/2005 18.618 595.4 8882536 333652 0 10/31/2005 15.397 596.7 8911627 336662 0 11/28/2005 17.384 592 8916377 344441 0 12/30/2005 27.92 589.4 8955472 406510 1 1/27/2006 14.555 593.9 9034368 322222 0 2/23/2006 18.684 595.2 9079246 318184 0 3/31/2006 16.639 598.6 9123848 366989 0 4/28/2006 20.17 603.5 9175181 357334 0 5/25/2006 16.901 606.5 9238576 380085 0 6/30/2006 21.47 607.8 9270505 373279 0 7/28/2006 16.542 609.6 9338876 368611 0 8/29/2006 16.98 610.9 9352650 382600 0 9/28/2006 20.091 607.9 9348494 352686 0 10/20/2006 16.583 604.6 9376027 354740 0 11/24/2006 18.761 603.6 9410758 363468 0 12/29/2006 28.795 604.5 9478531 424946 1 1/26/2007 20.473 606.348 9540335 332797 0

Explanation / Answer

(c)

I have ran the multiple regression on Wal-Mart revenue, using CPI, log(Personal Consumption), and log(Retail Sales Index) as the independent variables. I got the equation as,

WalMartRevenue = -1849.5094 - 0.3648 CPI + 102.0525 log(PersonalConsumption) + 35.2795 log(RetailSalesIndex)

As the coefficients of CPI is negative, WalMart Revenue decreases with increase in CPI.

As the coefficients of PersonalConsumption is positive, WalMart Revenue increases with increase in PersonalConsumption.

As the coefficients of RetailSalesIndex is positive, WalMart Revenue increases with increase in RetailSalesIndex.

So, it does not seem that Wal-Mart’s revenue is closely related to the general state of the economy, as it decreases with increase in CPI.

(f)

After removing the Dec quarter records, ran the multiple regression on Wal-Mart revenue, using CPI, log(Personal Consumption), and log(Retail Sales Index) as the independent variables. I got the equation as,

WalMartRevenue = -155.75923 + 0.05149 CPI + 4.91295 log(PersonalConsumption) + 5.00375 log(RetailSalesIndex)

As the coefficients of CPI is positive, WalMart Revenue increases with increase in CPI.

As the coefficients of PersonalConsumption is positive, WalMart Revenue increases with increase in PersonalConsumption.

As the coefficients of RetailSalesIndex is positive, WalMart Revenue increases with increase in RetailSalesIndex.

So, it seems that Wal-Mart’s revenue is closely related to the general state of the economy, as it increases with increase in CPI, PersonalConsumption and RetailSalesIndex.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

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