Regressions HSIEH Hw 1

# Regressions HSIEH Hw 1 - Regressions and Forecasting...

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Regressions and Forecasting: Professor Hsieh Homework Assignment 1 1. a. Pr( Z < -0.74) = .2296 b. Pr( Z > 0.33) = .3707 c. Pr( Z > -0.12) = .5478 d. Pr( |Z| < 1.93) = Pr( -1.93 < Z < 1.93) = Pr( Z < 1.93) - Pr( Z < -1.93) = .9732 - .0268 = .9464 2. a. Pr( Z < Z*) = .7019 Z* = 0.53 b. Pr(| Z| > Z*) = .1286 .1286 = Pr( Z > Z*) + Pr( Z < - Z*) .1286 / 2 = Pr( Z > Z*) = Pr( Z < - Z*) .0643 = Pr( Z > Z*) Z* = 1.52 c. Pr( Z > -Z*) = .6664 Z* = 0.43 d. Pr( |Z| < Z*) = .6528 Pr( -Z* < Z < Z*) = .6528 .6528 = 1 – 2*Pr( Z < -Z*) .1736 = Pr( Z < -Z*) Z* = 0.94 3. a. High mortgage rates will cause HomeDepot revenues to drop, since higher mortgage rates discourage potential home owners from purchasing new homes. Fewer new homes will require less building materials, which is one of HomeDepot’s main sources of revenue. There is an expected negative correlation between mortgage rates and revenues. b. --- c. 10.5

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## This note was uploaded on 08/27/2008 for the course ECON -0019 taught by Professor Hsieh during the Spring '08 term at NYU.

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Regressions HSIEH Hw 1 - Regressions and Forecasting...

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