Please show steps and explain.Thank you :) QUESTIONS ON SIMPLE LINEAR REGRESSION
ID: 3259694 • Letter: P
Question
Please show steps and explain.Thank you :)
QUESTIONS ON SIMPLE LINEAR REGRESSION
Questions 1-7 refer to the following situation: Stock Prices, Y, are assumed to be affected by the annual rate of dividend of stock, X. A simple linear regression analysis was performed on 20 observations and the results were::
Regression Equation Section
Independent Regression Standard T-Value Prob
Variable Coefficient Error (Ho: B=0) Level
INTERCEPT -7.964633 3.11101359 -2.560 ( )
X1 12.548580 1.27081204 ( ) 0.0001
1. What statistical conclusion should you make about the effect of the dividend on average stock price?
A. Since 11.30869 > critical value, reject the null hypothesis.
B. Since 12.54858 > critical value, reject the null hypothesis.
C. Since 9.874 < critical value, reject the null hypothesis.
D. Since 9.874 > critical value, reject the null hypothesis.
E. Since 0.7895 < critical value, fail to reject the null hypothesis.
2. Which one of the following assumptions is incorrectly stated?
A. The stock price is normally distributed for any dividend rate.
B. The stock price has the same variability for any dividend rate.
C. The stock price for any dividend rate is a linear function of dividend rate.
D. The difference between the stock price and the expected stock price
given the dividend rate is independent from company to company.
4. The interpretation of 0.7895, the value of R-square (the coefficient of determination) is:
A. 78.95% of the sample stock prices (around the mean stock price) can be attributed to a linear relationship with the dividend rate in the population.
B. the mean stock price will be estimated to increase $97.50 for each point increase in the rate.
C. the mean stock price will be increase $78.95 for each point increase in the rate.
D. the stock price will increase $78.95 for each point increase in the rate.
E. 78.95% of the sample variability in stock price (around the mean stock price) can be attributed to a linear relationship with the dividend rate.
5. What is the estimate of the change in expected stock prices when the dividend rate increases by one point?
A. 97.50
B. -7.964633
C. This is a parameter not a statistic.
D. 12.54858
E. 5.36546
Explanation / Answer
Ans:1)t=b1/SE=12.54858/1.271=9.874
Since 9.874 > critical value, reject the null hypothesis.
Option D is correct.
2)Option C is correct.
The stock price for any dividend rate is a linear function of dividend rate.
4)Option A is correct.
i.e. A. 78.95% of the sample stock prices (around the mean stock price) can be attributed to a linear relationship with the dividend rate in the population.
5)12.54858
Option D is correct.