Mgnt 6005 Takehome quiz 5

Mgnt 6005 Takehome quiz 5 - Mohammad Yahya Aladalh...

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Mohammad Yahya Aladalh Management 6005 – Mohammad Yahya Aladalh Take-home Quiz 5 – Honor code applies: Do not talk to your classmates 1. Briefly explain the meaning of R 2 , t stat , and F stat ? A time series analysis of demand tends to result to a higher R 2 than one using cross-sectional data. Why do you think this is the case? Explain why the F-test is more important in multiple regressions than simple regression analysis. R 2 is the measure of the goodness of fit for a multiple regression model. In other word, it is the square of the coefficient of multiple correlations. It shows how well a multiple regression model explains changes in the value of such dependant. t stat has an approximately normal test statistic with a mean of zero and a standard deviation of 1. F stat is the measure of statistical significance for the share of dependent variable variation explained by the regression model. A time series analysis of demand tends to result to a higher R2 than one using cross-sectional data because most economic phenomena are closely related to the overall level of economic activity and thus have an important time or trend element. Such exogenous forces are held constant in cross-section analyses and therefore cannot contribute to the overall explanatory
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This note was uploaded on 11/13/2011 for the course MIS 4100 taught by Professor Maxnorth during the Spring '11 term at Birmingham-Southern College.

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Mgnt 6005 Takehome quiz 5 - Mohammad Yahya Aladalh...

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