A simple regression model over the 1970-1993 period where the Y variable is the

Question

A simple regression model over the 1970-1993 period where the Y variable is the Disney year-end stock price and the X variable is Disney’s earnings per share reads as follows:

                                                                                                Coefficient                        T Score

Intercept                                                                                  -1.661                         -1.13

Earnings Per Share                                                                 31.388                         12.03

R2 = 68.68                                                     

F = 144.72

Fully Evaluate and Interpret these empirical results on the basis of all available statistics (use a 0.05 significance level).

Explanation / Answer

The regression model is :

y' = -1.661 +31.388x

The number of data values is: n = 24

The R-square is: 68.68%

It shows that 68.68% variation is dependent value  the Disney year-end stock price is explained by independent variables.

The degree of freedom of numerator: df1= 1

The degree of freedom of denominator df2= 24- 2 = 22

The p-value of F test is: 0.0000

Since p-value is less than 0.05 so we reject the null hypothesis.

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