Question

Applying Simple Linear Regression to Your favorite Data (Please confirm with the instructor the dataset you find before you work on this question) Many dependent variables in business serve as the subjects of regression modeling efforts. We list such variables here: Rate of return of a stock Annual unemployment rate Grade point average of an accounting student Gross domestic product of a country Choose one of these dependent variables, or choose some other dependent variable, for which you want to construct a prediction model. There may be a large number of independent variables that should be included in a prediction equation for the dependent variable you choose. List two potentially important variables, ?)and ?+, that you think might be (individually) strongly related to your dependent variable ?. Next, obtain 25 data values, each of which consists of a measure of your dependent variable ? and the corresponding values of ?) and?+. 2.3 Use the least squares formulas given in this chapter to fit two straight-line models-one for each independent variable- for predicting ?. 3 2.4 Interpret the sign of the estimated slope coefficient ?) , in each case, and test the utility of each model by testing ?’:?)=0 against ?0: ?)≠0. What assumptions must be satisfied to ensure the validity of these tests? 2.5 Calculate the coefficient of determination, ?+, for two model. Which of the independent variables predicts ? best for the 25 sampled sets of data? Is this variable necessarily best in general (i.e., for the entire population)? Explain.

Answer 1