ForQuestions23to26,refertothefollowinginformation

An investment specialist claims that if one holds a portfolio that moves in the opposite direction to the market index like the S&P 500, then it is possible to reduce the variability of the portfolio's return.In other words, one can make portfolio with positive returns butless exposure to risk.

Asampleof26yearsofS&P500indexandaportfolioconsistingofstocksofprivateprisons, which are believed to be negatively related to the S&P 500 index, is collected. Aregression analysis was performed by regressing the returns of the prison stocks portfolio (Y) on the returns of S&P 500 index (X) to prove that the prison stocks portfolio is negatively related to the S&P 500 index at a 5% level of significance. The results are given in the following EXCEL output.

	Coefficients	StandardError	T Stat	P-value
Intercept	4.8660	0.3574	13.6136	0.0000
S&P	-0.5025	0.0716	-7.0186	0.0000

Question23

To test whether the prison stocksportfolio is negatively related to the S&P 500 index,the appropriate null and alternative hypotheses are, respectively,

a) H0:=0vs.H1:0

1. H0:0vs.H1:<0
2. H0:0vs.H1:>0
3. H0:0vs.H1:=0
4. Noneoftheabove

Question24

To test whether the prison stocksportfolio is negatively related to the S&P 500 index,the measured value of the test statistic is

1. -7.019
2. -0.503
3. 0.072
4. 0.357
5. noneoftheabove

Question25

To test whether the prison stocks portfolio is negatively related to the S&P 500 index, thep- value of the associated test statistic is

1. 0.0000
2. 0.1234
3. 0.2315
4. 0.0026
5. 0.0017
6. Noneoftheabove

Question26.

whichofthefollowingwillbeacorrectconclusion?

1. You cannot reject the null hypothesis and, therefore, conclude that there is sufficient evidence to show that the prisons stock portfolio and S&P 500 index are negatively related.
2. You can reject the null hypothesis and, therefore, conclude that there is sufficient evidence to show that the prisons stock portfolio and S&P 500 index are negatively related.
3. Youcannotrejectthenullhypothesisand,therefore,concludethatthereisinsufficientevidence to show that the prisons stock portfolio and S&P 500 index are negatively related.
4. Youcanrejectthenullhypothesisandconcludethatthereisinsufficientevidencetoshow that the prisons stock portfolio and S&P 500 index are negatively related.
5. Noneoftheabove

Question27.

Candy bar Manufacturer is interested in trying to estimate how sales areinfluencedbythepriceoftheirproduct.Todothis,thecompanyrandomlychooses13 citiesandoffersthecandybaratdifferentprices.Usingcandybarsalesasthedependent variable,thecompanywillconductasimpleregressiononthedatabelow:

City	Price	Sales
Algoma	1.30	100
Barrie	1.60	90
Brampton	1.80	85
Carleton	2.00	50
Dalton	2.40	38
Flora	2.70	28
Fairfield	1.25	110
Gaspe	1.50	96
Hamilton	1.85	82
Keswick	2.05	47
LaTuque	2.45	35
Oakville	2.80	22
Treton	1.05	135

(

)(

) =11.66346

Sx = 0.56290,

x=1.90385,

Sy=35.83652,

y=70.61538

1. Whatistheresponsevariable?
2. Computethecoefficientofcorrelation.Interpretthevalue.
3. Computethecoefficientofdetermination.Interpretthevalue.
4. Constructtheequationofleastsquareregressionline.
5. Estimatethe candybar salesifthe priceis $4.20.Evaluatetheestimation
6. Estimatethe candybar salesifthe priceis$1.18.Evaluatethe estimation
7. The actual candy bar sales is53 when the price is $2.20. Calculate the residual.