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Unformatted text preview: verall model is
statistically useful for predicting company proﬁt at α = 0.10.
(b) Is there evidence to indicate that CEO income x1 and stock percentage x2 interact?
Use a level of α = 0.05.
(c) Based on the least squares estimates of the bj parameters, give the estimate of the
change in proﬁt for every one thousand dollar increase in a CEO’s income when a
CEO owns 2% of the company’s stock. STAT 420 Spring 2014: HW 7 3 University of Illinois Exercise 5
Suppose the interaction model
yi = b0 + b1 xi1 + b2 xi2 + b3 xi1 xi2 + ei
was ﬁt to n = 20 data points, and the following results were obtained:
> sum( lm( y
[1] 57
> sum( lm( y
[1] 40
> sum( lm( y
[1] 45
> sum( lm( y
[1] 36
> sum( lm( y
[1] 30
> lm( y ~ x1
(Intercept)
10 ~ 1 )$residuals^2 )
~ x1 )$residuals^2 )
~ x2 )$residuals^2 )
~ x1 + x2 )$residuals^2 )
~ x1 + x2 + I(x1*x2) )$residuals^2 )
+ x2 + I(...
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This homework help was uploaded on 04/03/2014 for the course STAT 420 taught by Professor Stepanov during the Spring '08 term at University of Illinois, Urbana Champaign.
 Spring '08
 Stepanov
 Statistics

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