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Investment analysts generally believe the interest rate on bonds is inversely related to the prime interest rate for loans; that is, bonds perform

This question was answered on Jan 01, 2013. View the Answer
Investment analysts generally believe the interest rate on bonds is inversely related to the prime
interest rate for loans; that is, bonds perform well when lending rates are down and perform poorly
when interest rates are up. Can the bond rate be predicted by the prime interest rate?
Use the following data to construct a scatter graph and then fit a regression line to the data.
Report the regression formula and the r-squared value from the chart (right click on the line, select
“Add Trendline” and select options to show these metrics).
Bond Rate Prime Interest Rate
5% 16%
12 6
9 8
15 4
7 7
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Top Answer

Since all the work on in excel so here is... View the full answer

8417445.xlsx

Prime Interest Rate Bond Rate
16
6
8
4
7 5
12
9
15
7 So from the obtained chart we can see the regression
equation is,
Bond Rate = 15.46 - 0.7146*Prime Interest Rate
and the observed R-sq is 0.6852...

This question was asked on Jan 01, 2013 and answered on Jan 01, 2013.

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