Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stock market returns The data file StocksMonthlyReturns_Data contains information on monthly returns of some stocks and the S&P 500 composite index. Before responding to the

image text in transcribed
Stock market returns The data file StocksMonthlyReturns_Data contains information on monthly returns of some stocks and the S&P 500 composite index. Before responding to the assignment questions, please run a simple regression JNJ~SP which has JNJ as the dependent variable and SP as the only independent variable. (Note: Question 1 can be answered without running a regression.) 1. What is the correlation between the monthly returns of Johnson& Johnson stock (JNJ) and monthly returns of the S&P 500 composite index (SP)? 2. Which of the following is the equation of the regression line ("best-fit" line) in the JNJ~SP regression? O JNJ = 0.246*SP O JN.J = 0.496*SP O JNJ = 0.648*SP O JNJ = 0.007 + 0.648*SP O JN.J = 0.496*SP + 0.048 O JNJ = 0.648*SP + 0.048 3. What is the standard error of regression (residual standard error) for the JNJ~SP regression? 4. Based on the JNJ~SP regression, how confident can one be that the beta for Johnson& Johnson is less than 0.75? (Hint: How confident can one be that the slope coefficient in the population model is less than 0.75?) O Less than 2.5% confident At least 2.5% confident but less than 16% confident O At least 16% confident but less than 50% confident O At least 50% confident but less than 84% confident O At least 84% confident but less than 97.5% confident O At least 97.5% confident 5. Using the JNJ~SP regression, what is the point estimate for the JNJ monthly return if the SP return in the same month will be +1%? 6. Based on the JNJ~SP regression, if the SP return in a month will be -1%, how confident can one be that the JNJ return in that month will be positive? O Less than 2.5% confident O At least 2.5% confident but less than 16% confident O At least 16% confident but less than 50% confident O At least 50% confident but less than 84% confident O At least 84% confident but less than 97.5% confident O At least 97.5% confident

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Stability Analysis Of Nonlinear Systems

Authors: Vangipuram Lakshmikantham, Srinivasa Leela, Anatoly A Martynyuk

2nd Edition

3319272004, 9783319272009

More Books

Students also viewed these Mathematics questions

Question

Explain all drawbacks of the application procedure.

Answered: 1 week ago

Question

What products or services does your key public commonly use?

Answered: 1 week ago

Question

What position do you seek?

Answered: 1 week ago