The Chief Financial Officer (CFO) of TAA Airlines was interested in understanding whether the stock price for the company was related to fuel prices. The researcher looked at data for the past 10 years and measured both the fuel price for that year (in $) and the stock price for the company (in $). The data collected is shown in the table below.

Assist the CFO by performing a simple linear regression analysis on the 2 (two) quantitative variables.

Fuel Price $ ( x )	34	44	36	48	49	24	32	20	25	32
Stock price $ ( y )	28	14	12	9	15	36	28	42	30	31

Given that: S_x² = 100.9333 S_y² =125.8333 S_xy = -102.1111 n = 10 x = 34.4 y = 24.5

a) Calculate the slope of the sample linear regression equation using the values given above.

Slope Coefficient =-102.111, 0.010, -1.012, -0.010

b) Provide an interpretation of the slope in terms of the relationship between the fuel price and the stock price using the values calculated in part a)

Interpretation:

c) Calculate the intercept of the sample linear regression equation using the information given at the start of the question and your answer to part a).

Intercept Coefficient =21.05, -10.3128, 59.3128, 27.94

d) Provide an interpretation of the intercept in terms of the relationship between the fuel price and the stock price.

Interpretation:

e) Using your answers to parts (a) and (c), state the sample linear regression equation.

Answer: e) Regression equation =

f) Based on the regression equation stated in part (e), predict the stock price for a fuel price of $40. Is this prediction valid? Please comment.

Answer: f) Prediction and Validity =

g) Using the values given at the beginning compute the sum of squared error and the standard error of the estimate.

SSE =1141.6047, 142496.9632, 2062.2235, 202.7759

Se =33.7876, 5.0346, 11.9457, 25.3470

g) Conduct a test on the slope to see if a significant negative relationship exists between the fuel price and stock price.Use a 5% level of significance and perform the test based on the following template of thecritical value method.

Use the template of the critical value method to answer the question.

Step 1: Set up the Hypotheses

H_o:

H_A:

Step 2: Standardised test statistic formula (Test statistic for the correlation coefficient or Test statistic for the slope coefficient)Test statistic for the slope coefficientTest statistic for the correlation coefficient

Step 3: Level of significance = 0.05

Step 4 (a) - What tailed test is this (Left tailed, Right tailed or Two-tailed)?Two-tailed testRight-tailed testLeft-tailed test

Step 4 (b) - What is the Critical value/s?-3.355, -1.645, 1.860, 3.355, -1.860, 1.645

Step 4 (c) - State the decision rule

Answer: Step 4 (c) - Decision Rule =

Step 5 - Calculation of the sample test statistic and

Answer: Step 5 - Calculation of test statistic =

Step 6: Conclusion

Answer: Step 6 - Conclusion =