This data file contains a variety of accounting and financial values that describe 493 companies operating in several technology industries in 2004: software, systems design, and semiconductor manufacturing. One column gives the expenses on research and development (R&D), and another gives the total assets of the companies. Both columns are reported in millions of dollars.
(a) Scatterplot R&D Expense on Assets. Does a line seem to you to be a good summary of the relationship between these two variables? Describe the outlying companies.
(b) Estimate the least squares linear equation for R&D Expense on Assets. Interpret the fitted intercept and slope. Be sure to include their units. Note if either estimate represents a large extrapolation and is consequently not reliable.
(c) Interpret the summary values r2 and se associated with the fitted equation. Attach units to these summary statistics as appropriate. Does the value of r2 seem fair to you as a characterization of how well the equation summarizes the association?
(d) Inspect the histograms of the x- and y-variables in this regression. Do the shapes of these histograms anticipate some aspects of the scatterplot and the linear relationship between these variables?
(e) Plot the residuals from this regression. Does this plot reveal patterns in the residuals? Does se provide an adequate summary of the residual