Question

In: Statistics and Probability

Professor Nickel is thinking of investing in two stocks: A and B. He has obtained data...

Professor Nickel is thinking of investing in two stocks: A and B. He has obtained data regarding the closing prices of these stocks on n = five days. Professor Nickel has calculated for this data that Sxx = 236.8, Sxy = -282.4, and error variance = 18.81.

Day Number --- Stock A price/share (x) --- Stock B price/share (y)

1 --- 91 --- 52

2 --- 85 --- 59

3 --- 75 --- 68

4 --- 72 --- 75

5 --- 83 --- 53

(a) Find the estimated regression line for this data.

(b) Find the 95% confidence intervals for the estimated slope and intercept of the regression line.

(c) Calculate R^2.

(d) Professor Nickel believes that there is a negative linear relationship between the price of Stock A and Stock B. To test this hypothesis, he has formed the null hypothesis H0 that the slope of the regression line is zero. Perform a one-sided hypothesis test with H1 that the slope is negative. Test H0 with α = 5%. Can you reject it?

Solutions

Expert Solution

orchestra answered 2 years ago
Next > < Previous

Related Solutions

Roger has a levered cost of equity of 0.12. He is thinking of investing in a...
Roger has a levered cost of equity of 0.12. He is thinking of investing in a project with upfront costs of $8 million, which pays $2 million per year for the next 8 years. He is going to borrow $4 million to offset the startup costs at a rate of 0.05. His tax rate is 0.3. He will repay this loan at the end of the project. What is the NPV of this project, using the FTE method? You Answered...
Roger has a levered cost of equity of 0.17. He is thinking of investing in a...
Roger has a levered cost of equity of 0.17. He is thinking of investing in a project with upfront costs of $8 million, which pays $2 million per year for the next 8 years. He is going to borrow $4 million to offset the startup costs at a rate of 0.05. His tax rate is 0.4. He will repay this loan at the end of the project. What is the NPV of this project, using the FTE method?
Roger has a levered cost of equity of 0.15. He is thinking of investing in a...
Roger has a levered cost of equity of 0.15. He is thinking of investing in a project with upfront costs of $9 million, which pays $3 million per year for the next 7 years. He is going to borrow $1 million to offset the startup costs at a rate of 0.05. His tax rate is 0.4. He will repay this loan at the end of the project. What is the NPV of this project, using the FTE method?
Professor Rogers has created a test of self-esteem and reported that he obtained a validity coefficient...
Professor Rogers has created a test of self-esteem and reported that he obtained a validity coefficient of .85. Before concluding that this is a good test, the most important question to ask is: a. What are Rogers' academic credentials? b. How many items are on the test? c. Against what criterion was the test validated? d. What is the response format?
Value of Investment. Morris will start investing $1,420 a year in stocks. He feels he can...
Value of Investment. Morris will start investing $1,420 a year in stocks. He feels he can average a 13% return. If he follows this plan, how much will he accumulate in 5 years? In 10 years? In 20 years?
(b) Professor GeniusAtCalculus has two lecture sections (A and B) of the same 4th year Advanced...
(b) Professor GeniusAtCalculus has two lecture sections (A and B) of the same 4th year Advanced Calculus (AMA 4301) course in Semester 2. She wants to investigate whether section A students maybe ”smarter” than section B students by comparing their performances in the midterm test. A random sample of 12 students were taken from section A, with mean midterm test score of 78.8 and standard deviation 8.5; and a random sample of 9 students were taken from section B, with...
If you were thinking about investing in the securities market, would you prefer individual stocks, mutual...
If you were thinking about investing in the securities market, would you prefer individual stocks, mutual funds, or ETFs? Explain your choice by comparing two (2) advantages and two (2) disadvantages of each.
A professor has two daughters that he hopes will one day go to college. Currently, in-state...
A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the local University pay about $21,435.00 per year (all expenses included). Tuition will increase by 5.00% per year going forward. The professor's oldest daughter, Sam, will start college in 16 years, while his youngest daughter, Ellie, will begin in 18 years. The professor is saving for their college by putting money in a mutual fund that pays about 9.00% per year. Tuition...
A professor has two daughters that he hopes will one day go to college. Currently, in-state...
A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the local University pay about $21,801.00 per year (all expenses included). Tuition will increase by 4.00% per year going forward. The professor's oldest daughter, Sam, will start college in 16 years, while his youngest daughter, Ellie, will begin in 18 years. The professor is saving for their college by putting money in a mutual fund that pays about 7.00% per year. Tuition...
A professor has two daughters that he hopes will one day go to college. Currently, in-state...
A professor has two daughters that he hopes will one day go to college. Currently, in-state students at the local University pay about $20,432.00 per year (all expenses included). Tuition will increase by 3.00% per year going forward. The professor's oldest daughter, Sam, will start college in 16 years, while his youngest daughter, Ellie, will begin in 18 years. The professor is saving for their college by putting money in a mutual fund that pays about 9.00% per year. Tuition...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT