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1.Discuss minimum of two (2) Ordinary least square (OLS) assumptions and their importance for a validity of regression model 1.The Head of production at Amiba
1.Discuss minimum of two (2) Ordinary least square (OLS) assumptions and their importance for a validity of regression model
1.The Head of production at Amiba private limited needed to examine the key determinants of company profitability($,000). So, he collected relevant(monthly) data and following is the summary of his regression output.
SUMMARY OUTPUT | |
Regression Statistics | |
Multiple R | 0.5776 |
R Square | 0.3336 |
Adjusted R Square | 0.2670 |
Standard Error | 2.2743 |
Observations | 34 |
ANOVA | |||||
df | SS | MS | F | Significance F | |
Regression | 3 | 77.6774 | 25.8925 | 5.0060 | 0.0062 |
Residual | 30 | 155.1693 | 5.1723 | ||
Total | 33 | 232.8467 |
Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | Lower 95.0% | Upper 95.0% | |
Intercept | 10.49 | 2.9211 | 3.5927 | 0.0012 | 4.5291 | 16.4605 | 4.5291 | 16.4605 |
Variable X | 0.99 | 1.2461 | 0.7937 | 0.4336 | -1.5559 | 3.5340 | -1.5559 | 3.5340 |
Variable Y | 2.56 | 1.1291 | 2.2663 | 0.0308 | 0.2529 | 4.8648 | 0.2529 | 4.8648 |
Variable Z | 2.06 | 1.2777 | 1.6107 | 0.1177 | -0.5515 | 4.6674 | -0.5515 | 4.6674 |
- Interpret the meaning of intercept coefficients and at 5% level review the significance of those variables to the model
- Calculate the adjusted R square and interpret its meaning
- Based on your opinion, decide the names of the explanatory variables used in the study. (Note: variable selection should have a valid justification)
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