Based on the regression results: b) What is the estimated regression equation? c

Question

Based on the regression results: b) What is the estimated regression equation?

c) How much of the variation in expense fees is explained by the regressors?

d) What is the standard error of the error term in the regression equation?

e) Are any of the explanatory (independent) variables significant at the 10% level of significance? How do you know?

f) What is the null and alternative hypothesis that Excel is testing in reporting the t-stats above?

g) Is the regression equation as a whole significant at the 1% level of significance? How do you know?

h) What is the effect on expense fees of a fund being a load fund versus a no-load fund?

SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 20 ANOVA MS Significance F Regression Residual Total 0.7694 0.0087 19 1.517 Coefficients 1.391 0.0338 0.0069 0.233 Standard Error 2.025 0.2666 0.0035 0.102 Lower 95% 2.901 0.5990 0.0004 Upper 95% 5.683 0.5315 0.0142 tStat P-value 0.687 0.502 Intercept Safety Rating Performance (%) Load 0.1267 0.9008 0.0636 2.293 0.036

Explanation / Answer

ANOVA Table

b) regression equation is
Y = 1.391 -0.0338safety Rating + 0.0069Performance + 0.233 Load
c) 50.72% variation in expense fees in explined by the regression
d) SE = 0.21616
e) P-value of SAfety Rating = 0.9008 > alpha 0.05, so no significant
P-value of Performance = 0.0636 > alpha 0.05, so no significant
P-value of load = 0.036 < alpha 0.05, so significant
f)
H0:population regression coeffiecients are equal to zero
H1: population regression coeffiecients are not equal to zero
g) The P-value of regression is 0.0087 < alpha 0.05, so the regression equation is best fit to the given data
h) the effect of Load fund is 0.233

Source df Sum of square mean Square F P-value Regression 3 0.7694 0.256466667 5.48885322 0.02551831 Error 16 0.7476 0.046725 Total 19 1.517

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