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.

(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?

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orchestra answered 1 year ago

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