Regression Supplement[1]

# Regression Supplement[1] - y = 0.9113x 2.9874 R² = 0 60 80...

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ST 225 Linear Regression Work Sheet The following scatter plot depicts Morningstar's Fair Value estimate and Share Price for 28 equities traded on the New York Stock Exchange. Fair Value is an estimate of a company's value per share that takes into account estimates of the company's growth, profitability, riskiness, and other factors over the next five years ( Morningstar Stocks 500, 2008 edition ). 1. What is the correlation between Fair Value and Share Price? 2. What percent of Share Price is explained by Fair Value? 3. Interpret the slop in the context of this problem.

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Unformatted text preview: y = 0.9113x - 2.9874 R² = 0.7694 20 40 60 80 100 120 20 40 60 80 100 120 Share Price (\$) Fair Value (\$) Fair Value vs. Share Price 4. Interpret the y-intercept in the context of this problem. 5. There was no data for a company with a Fair Value of \$70/share. What would you predict for the average Share Price for a company with this Fair Value? 6. There was also no data for a company with a Fair Value of \$140/share. Should you make a prediction for the average Share Price for a company with this Fair Value? Why or why not?...
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Regression Supplement[1] - y = 0.9113x 2.9874 R² = 0 60 80...

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