Question

2. Describe the difference in interpretation, if there is any, between the population pa- ˆˆ

3. Describe what information β1 and ρ can reveal. What information do they both share? And what distinct information do they provide?

4. What is the economic interpretation of the coefficient β0 in the example of Apple in

the notes for the Stats boot camp II?

Answer 1

2. Parameter- a statistical constant of population

Population parameter is an aggregate of the objects under study.

Sample parameter is a finite subset of individuals in a population.

3. Beta 1 is known as slope coefficient of the equation. It shows that by one unit change in explanatory variable, how much change can take place in dependent variable.

Rho is known as the correlation coefficient and it shows the kind of relationship between dependent and independent variable.

They both give different information, beta provides the slope of the equation or impact of independent variable on dependent variable, while rho tells the relationship or association between dependent and independent variable.

4. Generally, beta 0 is known as the intercept term of the equation. It shows the minimum value of dependent variable when the independent variable is zero.

For a better answer, you should provide the equation as well, but I have attempted this question as per the general notation.