10-79

A regression was carried out aimed at assessing the effect of the offer price of an initial public offering (IPO) on the chances of failure of the firm issuing the IPO over various time period from the time of offering ( the maximum length of time being 5 years). The sample was of 2,058 firms, and the regression slope estimates was -0.051> The reported p-value was 0.034. What was the standard error of the slope estimate? Interpret the findings.

10-80

A study was undertaken to find out whether neuroticism affected job performance. The slope estimate of the regression line was 0.16 and r² was 0.19. The sample size was 151. The reported value of the statistical significance of the slope estimate was p

10-82

The following data are operating income X and monthly stock close Y for Clorox, Inc. Graph he data. Then regress log Y on X.

X ( $millions): 240, 250, 260, 270,280,300, 310,320,330,340,350,360,370,400,420,420,430,450.

Y ($s): 45,42,44,46,47,50,48,60,61,59,67,75,74,65,95,110,125,130.

Predict Y for X = 305.

10-83

One of several simple linear regression run to assess firm's stock performance based on the Capital Asset Pricing Model (CAPM) for firms with high ratios of cash flow to stock price was the following.

Firm excess return= 0.95 +0.92 Market excess return + Error.

The standard error of the slope estimate was 0.01 and the sample size was 600 (50 years of monthly observations).

a) Is this regression relationship statistically significant?

b) If the market excess return is 1%, predict the excess return for a firm's stock.

10-86

Regress Y against X with the following data from a random sample of the observations:

X Y

12 100

4 60

10 96

15 102

6 68

4 70

13 102

11 92

10 95

18 125

20 134

22 133

8 87

20 122

11 101

a) What is the regression equation?

b) What is the 90% confidence interval for the slope

c) Test the null hypothesis "X does not affect Y" at an ά of 1%

d) Test the null hypothesis "the slope is zero" at an ά of 1%

e) Make a point prediction of Y when X=10

f) Assume that the value of X is controllable. What should be the value of X if the desired value for Y is 100

g) Construct a residual plot. Are the residuals random

h) Construct a normal probability plot. Are the residuals normally distributed.

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