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Author Question: Consider the following model y = 0 + 1x + , where y is the daily rate of return of a stock, and x is ... (Read 42 times)

craiczarry

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Question 1

An academic advisor wants to predict the typical starting salary of a graduate at a top business school using the GMAT score of the school as a predictor variable. A simple linear regression of SALARY versus GMAT using 25 data points is shown below.

0 = -92040  1 = 228  s = 3213   df = 23 t = 6.67

Set up the null and alternative hypotheses for testing whether a linear relationship exists between SALARY and GMAT.
H0: β1 = 0 vs. Ha: β1 ≠ 0
H0: β1 = 0 vs. Ha: β1 > 0
H0: β1 > 0 vs. Ha: β1 < 0
H0: 1 = 228 vs. Ha: 1 > 228

Question 2

Consider the following model y = β0 + β1x + , where y is the daily rate of return of a stock, and x is the daily rate of return of the stock market as a whole, measured by the daily rate of return of Standard & Poor's (S&P) 500 Composite Index. Using a random sample of n = 12 days from 2007, the least squares lines shown in the table below were obtained for four firms. The estimated standard error of 1 is shown to the right of each least squares prediction equation.
FirmEstimated Market ModelEstimated Standard Error of β1
Company Ay = .0010 + 1.40x.03
Company By = .0005 - 1.21x.06
Company Cy = .0010 + 1.62x1.34
Company Dy = .0013 + .76x.15
Calculate the test statistic for determining whether the market model is useful for predicting daily rate of return of Company A's stock.
◦ 46.7
◦ 1.40
◦ 161.6
◦ 1.40 ± .067


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Marked as best answer by craiczarry on Feb 14, 2020

mammy1697

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craiczarry

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Reply 2 on: Feb 14, 2020
YES! Correct, THANKS for helping me on my review


kusterl

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Reply 3 on: Yesterday
Gracias!

 

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