How are returns on common stocks in overseas markets related to returns in one c

Question

How are returns on common stocks in overseas markets related to returns in one countries markets? Consider measuring the countries returns by the annual rate of return on the index A and overseas returns by the annual rate of return on index B. Both are recorded in percents. We will regress the B returns on the A returns for 27 years. Here is part of the output for this regression. The regression equation is

B = ?3.17 + 0.819A.

Complete the analysis of variance table by filling in the missing boxes. (Round your answer for F to two decimal places and your answers for SS and MS to one decimal place.)

Analysis of Variance source DF SS MS F regression 1 5551.3 residual error total 26 10078.3

Explanation / Answer

as df residual=df(total)-df(regression)=26-1=25

MS (regression)=SS(regression)/df(regression)=5551.3/1=5551.3

SS(error)=SS(total)-SS(regression)=10078.3-5551.3=4527

MS(error)=SS(error)/df(error)=4527/25 =181.08

hence F test statistic =MS (regression)/MS(error)=5551.3/181.08=30.66

Source df SS MS F regression 1 5551.3 5551.3 30.66 residual 25 4527 181.08 total 26 10078.3

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

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