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Assignment #5

# Assignment #5 - StatTools Assignment#5 This assignment has...

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StatTools Assignment #5 This assignment has only one part . Part I. See the class web site for more specific directions. INTERPRET and COMMUNICATE. Use StatTools to generate the required analyses to answer the questions below. Note – these are the same questions as are listed in the Moore and McCabe book, aside from the addition of part (f). a. Regress the MO returns on the market returns (i.e. – use StatTools to generate a regression analysis using the market returns to predict the MO returns). Make a scatterplot and draw the least-squares line on the plot. Explain carefully what the slope and intercept of the line mean, in terms understandable to an investor. Also, give a measure of the strength of the relationship and explain its meaning to an investor. Multiple R-Square Adjusted StErr of Summary R R-Square Estimate 0.5251 0.2757 0.2668 6.468314267 Degrees of Sum of Mean of  F-Ratio p-Value ANOVA Table Freedom Squares Squares Explained 1 1290.114718 1290.114718 30.8352 < 0.0001 Unexplained 81 3388.966246 41.83908946 Coefficient Standard t-Value p-Value Confidence Interval 95% Regression Table Error Lower Upper Constant 0.35368491 0.761229192 0.4646 0.6434 -1.160922403 1.868292223 S&P 1.169539302 0.210616198 5.5529 < 0.0001 0.750479134 1.58859947 Scatterplot of MO vs S&P of Data Set #1 y = 1.1695x + 0.3537 R 2 = 0.2757 -30 -20 -10 0 10 20 30 -10 -5 0 5 10 15 S&P / Data Set #1 MO / Data Set #1 The slope of 1.1695 means that as the returns on the Standard & Poor’s 500-stock index increases by one percent the monthly returns on the common stock of Philip Morris will increase by 1.1695 percent. The intercept means that if the returns on the Standard &

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