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prob6sol

# prob6sol - ISMT 111 Business Statistics Simplified Solution...

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ISMT 111 Business Statistics Simplified Solution for Problem Sheet 6 1. (a) 1 ˆ b = 1.7483 0 ˆ b = - 8.0068 y ˆ = - 8.0068 + 1.7483 x When there is a 1% increase in the market return, the average return on Dalton Company s stock tends to increase by 1.7483 %. (b) H 0 : b 1 = 1 H a : b 1 > 1 Test statistic t = 2.5963; and t α , n 2 = t 0.05, 8 = 1.86 Since t > t 0.05, 8 , reject H 0 at 0.05 level of significance. We have sufficient evidence that Dalton s Company s Stock is sensitive to the market. (c) A 90% P. I. for y given x = 10.5 is (6.6151, 14.0856) (d) r = 0.9063 R 2 = 0.8214 or 82.14% (e) A 98% C. I. for E( y | x = 14) is (13.2046, 19.7342) 2. (a) 1 ˆ b = - 364.6 On average, the Calorie content decreases by 364.6 when there is an unit increase in the Price per ounce. (b) H 0 : b 1 = 0 H a : b 1 0 Test statistic t = - 3.603; and t 0.025, 7 = 2.365 Since | t | > t 0.025, 7 , reject H 0 at 0.05 level of significance. The price is a good predictor of the calorie content. (c) R 2 = 0.6498 = 64.98% That means 64.98% of the variability of the calorie content can be explained by the price. 3. (a) 1 ˆ b = 0.564347826 0 ˆ b = 7.086956522 (b) 35.30434783 (c) A 95% P. I. is (2.039713895, 45.99506871) 4. (a) y ˆ = 0.22072 + 0.47114 x (b) No. It is not meaningful to interpret (reasons should be given) . (c) For a unit increase in the test score ( x ), the grade point average ( y ) is expected to increase by 0.47114 points.

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prob6sol - ISMT 111 Business Statistics Simplified Solution...

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