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Individual Assignment
Individual Assignment
Fall- 2018-2019
Individual Assignment
TEST INFORMATION
STUDENT INFORMATION
Student Name
ID Number
Item Total
Question no. A B C
CLO’s SK4 SK4 SK4
Addressed
Marks 10 5 5 20
allocated
Marks
obtained
Marks
obtained
(words)
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Fall: 2018-2019 Assignment
The prices of Rawlston, Inc. stock (y) over a period of 12 days, the number of shares (in 100s) of
company's stocks sold (x1), and the volume of exchange (in millions) on the New York
Stock Exchange (x2) are shown below.
Excel was used to determine the least-squares regression equation. Part of the computer
output is shown below.
ANOVA
df SS MS F Significance F
Regression 2 118.8474 59.4237 40.9216 0.0000
Residual 9 13.0692 1.4521
Total 11 131.9167
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Fall: 2018-2019 Assignment
a) equation: y=118.5059-0.0163*x1-1.5726*x2
c)p value of x2 is less tha 0.05 whrere as p value of zx1>0.05 so we can say that At
95% confidence, X2 is significant and x1 is not.
y=118.5059-0.0163*945-1.5726*16=77.9408
(a)
price= 118.5059-0.0163*x1-1.5726*x2
(b)
For each unit increase in stock sold (x1), price decrease by 0.0163 units keeping all
other things constant.
For each unir increase in x2, price decrease by 1.5726 units keeping all other things
constant.
(c)
P-value of the X1 is 0.6176. Since p-value is greater than 0.05 so this coeffcient is
significant to the model.
P-value of the X2 is 0.0018. Since p-value is less than 0.05 so this coeffcient is not
significant to the model.
(d)
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Fall: 2018-2019 Assignment
Page 4 of 10
Fall: 2018-2019 Assignment
The Dependent variable is stock price which is y and the independent variables are
x1 and x2 which are stocks sold and volume of stock on NYSE. Y depend on x1 and
x2 because the stock price is determined using both stock sold and volume of stocks
on NYSE.
What is the equation?
The equation is y=118.51-0.016x1-1.57x2
If on a given day, the number of shares of the company that were sold was 94,500
and the volume of exchange on the New York Stock Exchange was 16 million, what
would you expect the price of the stock to be? Will the prediction be accurate?
Explain
By plugging x1=945 and x2=16 into the equation y= stock price= 77.94, the
prediction should be accurate because all the variables(x1=945 and x2=16 ) are in
the range of the variables used in the regression model and we have a high r^2.
What do the coefficients of the estimated regression line indicate? Explain.
y will decrease by 0.0163 per unit increase in x1 keeping x2 constant and y will
decrease by 1.5726 per unit increase in x2 keeping x1 constant. The number of
shares of company's stocks sold are negatively associated with price of the stock.
The volume of exchange on NYSE are also negatively associated with the price of
the stock.
Compute the coefficient of determination (R2) and fully interpret its meaning.
According to the table above r^2=0.90 which mean that the model has a good fit,
which mean that more variance is accounted by the regression model and that the
data point are closer to the fitted regression line.
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Fall: 2018-2019 Assignment
Page 6 of 10
Fall: 2018-2019 Assignment
Question B (5 Marks)
The average starting salary of students who graduated from colleges of Business in 2009 was
$48,400. A sample of 100 graduates of 2010 showed an average starting salary of $50,000.
Assume the standard deviation of the population is known to be $8,000. We want to
determine whether or not there has been a significant increase in the starting salaries.
Required:
a. State the null and alternative hypotheses to be tested. (1 mark)
b. Compute the test statistic. (1 mark)
c. The null hypothesis is to be tested at 95% confidence. Determine the critical value
for this test. (1 mark)
d. What do you conclude? (1 mark)
e. Compute the p-value. (1 mark)
Ho: μ ≤ 48,400
Ha: μ > 48,400
Answer: 2
Answer: 1.65
Answer: 0.0228
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Fall: 2018-2019 Assignment
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Fall: 2018-2019 Assignment
Page 9 of 10
Fall: 2018-2019 Assignment
Question C (5 Marks)
Consider the following annual series on the number of people assisted by a county human
resources department.
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