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Many variables influence the price of a company's common stock, including company-specific internal variables such as product quality and financial performance, and external market variables
Many variables influence the price of a company's common stock, including company-specific internal variables such as product quality and financial performance, and external market variables such as interest rates, exchange rates and stock market performance. The attached table contains quarterly data on three such external variables (x1, x2, and x3) and the price y of Ford Motor Company's common stock (adjusted for stock splits). The Japanese yen exchange rate, xl, measures the strength of the yen versus the US dollar. The higher the rate, the cheaper are Japanese imports such as the automobiles of Toyota, Nissan, Honda, and Subaru to US consumers. Similarly, the higher the deutsche mark exchange rate, x2, the less expensive are BMW's and Mercedes Benz's to US consumers. Finally, the S&P 500 Index, x3, is a general measure of the performance of the market for stocks in US firms. Answer the questions below using the critical value approach and/or the p-value approach b) Find the coefficient of determination and interpret its value. Ford stock Price Japanese Yen x1 Deutsche Mark x2 S&P500 x3 Date 1992.1 38.3 133.2 1.64 407.36 1992.2 45.2 125.5 1.53 408.21 1992.3 39.4 119.2 1.41 418.48 1992.4 42.7 124.7 1.61 435.64 1993.1 52.3 121.3 1.61 450.16 1993.2 55.3 110.1 1.69 447.29 1993.3 64.7 105.2 1.62 459.24 1993.4 58.1 111.3 1.73 465.34 1994.1 59.9 103.4 1.76 463.21 1994.2 27.6 99.5 1.6 454.83 1994.3 27.5 98.5 1.55 466.96 1994.4 26.3 99.6 1.38 455.19 1995.1 29.5 89.4 1.39 493.15 1995.2 31.2 84.6 1.42 539.23 1995.3 28.7 98.2 1.43 578.32 1995.4 28.9 102.4 1.48 614.57 1996.1 34.8 106.3 1.52 647.05 1996.2 36.2 109.8 1.58 668.53 1996.3 32.1 110.5 1.61 672.92 1996.4 33.9 112.8 1.69 689.35
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