ANSWER SSR SST SSE 127833 4602 81813 7 What is the correlation coefficient for

# Answer ssr sst sse 127833 4602 81813 7 what is the

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ANSWER: SSR = SST SSE =1278.33-460.2 = 818.13 7. What is the correlation coefficient for the stock returns of the two years? What sign does it have? Why? ANSWER: r = 2 0.64 R   = 0.80. It has a positive sign since 1 b = 1.04 is positive.
Simple Regression 2 8. What are the appropriate null and alternative hypotheses? ANSWER: 0 1 : 0 and : 0 H H 9. Test the hypothesis in the eightieth question at = 0.05. ANSWER: The test statistic 2 2 2 / 1 0.80 13/ 0.36 4.807 1 / 2 r t r n r r n Since 2, 13, 0.05 1.771 n t t , we reject 0 H at =0.05. We conclude that the stock returns in 2004 and 2005 are positively correlated. 10. Test 0 1 1 1 : 0 vs. : 0 at 0.025 H H . ANSWER: The test statistic 1 1 1 / 1.04/0.2163 4.808 b t b s .Since, 2, 13, 0.025 2.16 n t t , we reject 0 H at =0.025 and conclude that there is a positive linear relationship between the stock returns in 2004 and 2005. 11. Prepare the analysis of variance table for regression. ANSWER: Source of variation SS df MS F Regression 818.13 1 818.13 23.11 Error 460.2 13 35.4 Total 1278.33 14 12. Use the F -statistic in the eleventh question to test the hypothesis in the tenth question at = 0.05.

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