Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ing data represent the annual rates of return of two companies' stock for the past 12 years. Comple w the data table. Click here to
ing data represent the annual rates of return of two companies' stock for the past 12 years. Comple w the data table. Click here to view the table of critical values of the correlation coefficient X Critical Values of the Correlation Coefficient Choose n 3 0.997 - X Data Table 4 0.950 5 0.878 6 0.811 7 0.754 8 0.707 Year Rate of Return of Company Rate of Return of Company 9 0.666 2 10 0.632 2007 0.203 0.398 11 0.602 12 0.576 2008 0.310 0.510 13 0.553 2009 0.267 0.410 14 0.532 2010 0.195 0.426 15 0.514 2011 - 0.101 - 0.060 16 0.497 2012 -0.130 - 0.161 17 0.482 2013 - 0.234 -0.377 18 0.468 19 0.456 2014 0.264 0.308 20 0.444 2015 0.090 0.207 21 0.433 2016 0.030 - 0.014 22 0.423 2017 0.128 0.093 23 0.413 2018 - 0.035 0.027 24 0.404 25 0.396 26 0.388 27 0.381 28 0.374 Com Print Done 29 0.367 30 0.361 nThe accompanying data represent the annual rates of return of two companies' stock for the past 12 years. Complete parts (a) through (k). (a) Draw a scatter diagram of the data treating the rate of return of Company 1 as the explanatory variable. Choose the correct graph below. O A. OB. 0.50 0.30- RR of Company 2 RR of Company 1 0.00- -0.50- -0.30- 0.3 0.0 0.3 -0.5 0.0 0.5 RR of Company 1 RR of Company 2 O C. OD. 0.50- 0.50- RR of Company 2 0.00- RR of Company 1 0.00- -0.50- -0.3 0.0 0.3 -0.50- -0.3 RR of Company 1 0.0 0.3 RR of Company 2 b) Determine the correlation coefficient between rate of return of Company 1 and Company 2. The correlation coefficient is]. (Round to three decimal places as needed.) (c) Based on the scatter diagram and correlation coefficient, is there a linear relation between rate of return of Company 1 and Company 2? O No O YesThe accompanying data represent the annual rates of return of two companies' stock for the past 12 years. Complete parts (a) through (k). (d) Find the least-squares regression line treating the rate of return of Company 1 as the explanatory variable. y = [x+ 0 (Round to four decimal places as needed.) (e) Predict the rate of return of Company 2 if the rate of return of Company 1 is 0.1 (10%). The rate of return of Company 2 will be]. (Round to four decimal places as needed.) (f) If the actual rate of return for Company 2 was 21.4% when the rate of return of Company 1 was 10%, was the performance of Company 2 above or below average among all years the returns of Company 1 were 10%? O Above average O Below average g) Interpret the slope. For each percentage point increase in the rate of return for Company 1, the rate of return of Company 2 will by about percentage points, on average. (Round to two decimal places as needed.) (h) Interpret the y-intercept. O A. There is no meaningful interpretation for the intercept. B. The y-intercept indicates that the rate of return for Company 1 will be when the rate of return for Company 2 is 0. Round to four decimal places as needed.) C. The y-intercept indicates that the rate of return for Company 2 will be when the rate of return for Company 1 is 0. (Round to four decimal places as needed.) (i) What proportion of the variability in the rate of return of Company 2 is explained by the variability in the rate of return of Company 1? The proportion of the variability is%. (Round to one decimal place as needed.)The accompanying data represent the annual rates of return of two companies' stock for the past 12 years. Complete parts (a) through (k). (i) What proportion of the variability in the rate of return of Company 2 is explained by the variability in the rate of return of Company 1? The proportion of the variability is%. (Round to one decimal place as needed.) (j) Plot residuals against the rate of return of Company 1. Choose the correct graph below. O A. 0.25- OB. 0.30- Residual Residual 0.00 0.20 -0.15- 0.3 0.0 0.3 0.10- .0.3 0.0 RR of Company 1 0.3 RR of Company 1 O C. 0.15- OD. 0.20- 0.00- Residual Residual 0.10- -0.25- -0.3 0.0 0.3 0.00- 0.3 0.0 0.3 RR of Company 1 RR of Company 1 Does the residual plot confirm that the relation between the rate of return of Company 1 and Company 2 is linear? No O Yes(k) Are there any years where the rate of return of Company 2 was unusual? O Yes O No
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started