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The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 (S&P 500) indexes are used as measures of overall movement in the stock
The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 (S&P 500) indexes are used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the S&P 500 for 15 weeks, beginning with January 6, 2012, follow (Barron'swebsite, April 17, 2012).
Click on the datafile logo to reference the data.
Date DJIA S&P January 6 12,360 1,278 January 13 12,422 1,289 January 20 12,720 1,315 January 27 12,660 1,316 February 3 12,862 1,345 February 10 12,801 1,343 February 17 12,950 1,362 February 24 12,983 1,366 March 2 12,978 1,370 March 9 12,922 1,371 March 16 13,233 1,404 March 23 13,081 1,397 March 30 13,212 1,408 April 5 13,060 1,398 April 16 12,850 1,370
(b) Use the data to develop an sertimated regression equation showing how S&P 500 is reiated to DJLA. What is the estimated regression model? Let x represent the DJLA indexes. If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: GOD) L +:1x (c) What is the 95% condence interval for the regression parameter 15.1? If required, round your answer to three decimal places. Lower 95% : Upper 95% = Based on this intervai, what conclusion can you make about the hypotheses that the regression parameter .8, is equai to zero? Because the interval 7 Select your answer 7 V 0 7 Select your answer 7 V the hypothesis that B; = D. (d) What is the 95% condence interval for the regression parameter 50? If required, round your answer on three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the biank. (Example: 400) Lower 95% = Upper 95% = Based on this intervai, what conclusion can you make about the hypotheses that the regression parameter .50 is equai to zero? Because the interval Select your answer V l] - Select your answer V the hypothesis that Ba = D. (e) How much of the variation in the sample values of S&P 500 does the model estimated in part (b) explain? If required, round your answer to two decimal placa. % (f) Suppose that the closing price for the DJIA is 13,1. Estimate the closing price For the SKP lm. If required, round your answer to the nearest whole number. Do not round intermediate calculations. (g) Should we be concerned with the DJIA value used to predict the 58.!) 500 value in part (f)? The maximum DJLA in the sample data is 13,233, so when the DJIA value of 13,100 is used to predict the 58m 500 value in part (f) the regression model has Select your answer V extrapolated beyond the experimental region of the data, so you should Select your answe V concerned about this prediction
The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 (S&P 500) indexes are used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the S&P 500 for 15 weeks, beginning with January 6, 2012, follow (Barron'swebsite, April 17, 2012). Click on the datafile logo to reference the data.
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