Question

Please assist with the information below.

23. Use Table below for questions 23 to 27. You are asked to estimate Return%. Use simple regression. What is the regression equation?

Fund	Annual Expense Ratio (%)	Return (%)
Company A	1.59	49
Company B	1.35	52
Company C	1.68	89
Company D	1.56	58
Company E	2.16	131
Company F	1.8	59
Company G	1.88	99
Company H	0.9	53
Company I	1.79	77
Company J	1.49	54
Company K	1.05	57
Company L	1.25	61
Company M	1.83	88
Company N	1.94	122
Company O	1.09	71
Company P	1.5	51
Company Q	1.28	60
Company R	1.65	50
Company S	1.61	93
Company T	1.5	47

1. Y = 51.65X - 8.75
2. Y = -8.75X + 51.65
3. Y = 0.93 + 0.009X
4. Y = 0.009 + 0.93X

24. What percent of variability in Return% is explained by regression?

1. 40%
2. 68%
3. 45%
4. 71%

25. What can you say about the relationship between Return% and Annual Expense Ratio %?

1. For each % increase in Annual Expense Ratio, Return% decreases 8.8%
2. For each % increase in Annual Expense Ratio, Return % increases 51.6%
3. For each % increase in Return%, Annual Expense Ratio decreases 8.8%
4. For each % increase in Return%, Annual Expense Ratio increases 51.6%

26. If a company’s Annual Expense Ratio is 1.94, what is your estimate of Return% for that company?

1. 67%
2. 122%
3. 35%
4. 91%

27. Is the slope of the regression model statistically significant at the alpha = .05 level?

1. Yes
2. No
3. No, it would take more data points to determine this
4. Not enough data to determine this

Answer 1

1)

option A is correct

Y = 51.65X - 8.75

2)

SST=Syy=		11,722.9500
SSE =Syy-(Sxy)2/Sxx=		6,497.3741
SSR =(Sxy)2/Sxx =		5,225.5759

percent of variability in Return% is explained by regression: =(SSR/SST)*100=45%

3)

For each % increase in Annual Expense Ratio, Return % increases 51.6%

4)

predicted val=-8.75+1.94*51.65=

91.451 ~ 91 %

5)

option A: Yes