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Problem_11.61 - Problem 11.61 Analyze and interpret the...

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Unformatted text preview: Problem 11.61 Analyze and interpret the following partial regression results. J3 3 Return On investment -> ROl x1 = Investment -> amount of total investment x2 = Early a amount of initial investment x3 x4 = Type of industry (dummy 1 and 2) 00 ~———> high tech (base) 01 —> bioengineering 10 e aerospace partial oomguter results: Return = 6.16 + .617 invest + .151 Early +11.1X3 +4.14 X4 (1.642) (.158) (.147) (1.36) (1.32) R2 a 91.6% it“? = 89.4% Source _. Disruares Regression 4 755.99 Error 16 66.21 Total 19 825.20 Problem 11.61 (continued) F __ SSR/k M755.99/4 1“" SSE/(it—k—l) 69.21/15 Fcrit if": F.05,4,15 = 3.06 = 40.96 Foam > Fem reject Ho: B1: [32 e [33 e [34 =0 Test the individual regression coefficients. tent = t.025,15 3 i 2-131 131x(.617)/(.158)e 3.91 t3; = (.151)/(.147) = 1.03 tfig : (11.1)/(1.36) = 8.16 tB4 = (4.15)/(1.32) = 3.14 3.91, 8.16, and 3.14 > 2.131 1.03 < 2.131 [31, [53, and B4, are significantly different from 0, but [32 is not and could be dropped from the model Problem 11.61 (continued) R2 and F2 are high and the F is significant Three of the four coefficients are significant, but we could drop x2 (Early Investment) if we wanted. b1 == .617 —-> the amount of change in J"? for a one unit change in x1. ROI will increase by $617 for a $1000 increase in Total Investment b3 = 11.1 ——> the amount J3will change if the firm is in aerospace compared to being in high-tech b4 2 4.15 —+ the amount J7wiII change if the firm is in bioengineering compared to being in high tech - ...
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