Md.

Khaleduzzaman Monayam Hossain Moin Serajul Islam

20231164 20231160 20231167

Mathematical Assignment
&
Project
On
Interest Rate Effect on Investment Growth

Sl. Group Member Name Student Number

1 MD. Khaleduzzaman 20231164
2 Serajul Islam 20231167
3 Monayam Hossain Moin 20231160

Subject: Quantitative methods in Finance

Submission Date: 2nd January 2024

Submitted to: Douglas Eduardo Turatti

1|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Part 1 - Mathematical Assignment

Question 1.1
Explain how to find the weights wA and wB that lead to minimum variance. In other words,
explain the procedure for single (or multiple)-variable unconstrained optimization applied to
the variance of the portfolio. State first-order and second-order conditions applied to this
problem. Note: You do not need to solve first-order and second order conditions.
Answer 1.1:
For this problem we want to find the minimum variance portfolio which is the combination of
the two assets with the lowest risk (variance). This does not work if the two assets have a
perfect positive correlation of 1 because then you won't get the benefit of diversification,
unless you are short-selling the asset with the higher variance which can be hard in practice.
If there is a perfect negative correlation of -1 we can find a combination of asset A and asset
B where the only risk is the systematic market risk which can’t be diversified away. Finding
two stocks with a correlation of -1 is almost impossible in practice. Examples of systematic
market risk could be high interest rates, high unemployment or high inflation which are
external factors that companies can’t directly affect and which does not only affect the given
companies but the whole market.

To find the weights WA and WB that lead to the minimum variance portfolio, we can use
single-variable unconstrained optimization. This means finding the values of the variables
(WA and WB) that minimize or maximize the objective function (in this case, minimizing the
variance of the portfolio).

The procedure for single-variable unconstrained optimization follows these steps:

- Identification of the objective function that we want to minimize or maximize. In this
case, the objective function is the variance of the portfolio, which is a function of WA
and WB.
- Rewriting the objective function as a function of only one variable. In this case, we

2|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

can rewrite the variance of the portfolio as a function of only WB.

- Taking the derivative of the objective function with respect to the variable of interest
(WB). This will give us the slope of the objective function.
- Setting the derivative equal to zero and solving for the variable of interest (WB). This
will give us the value of the variable that minimizes the objective function. This results
in the equation:

- Putting the value of the variable back into the objective function to find the minimum
value of the objective function. So, after solving this equation it is easy to find the
weight of asset B because we know that WA + WB = 1. Thus, the weight of asset B is
given by (1-WA ).

Question 1.2
The exponentially weighted moving-average (EWMA) is a popular and simple model to
generate forecasts of covariance matrices. The model is usually written as
ˆΣ
t+1 = (1 − λ)r′
trt + λˆΣt, (3)
where ˆΣt+1 is the forecast for the covariance matrix at day t + 1, λ is a discounting parameter,
rt is a row vector of log-returns for several assets for a given day t, and ˆΣt is the forecast of
the covariance matrix at day t. Provide the forecast of the covariance matrix for 02-11-2023
using the above data set. Consider λ = 0.92, and ˆΣt as the estimated covariance matrix using
the whole data.
Hint: Use a software. Check slides of lecture 3 to _nd how to estimate the covariance matrix.
Identify what is rt, do the matrix multiplication, and _nd the forecast as a sum of two parts.
Answer 1.2:
We have done this forecasting of the covariance matrix for 02-11-2023 in excel spreadsheet
and organize the log-return data for asset A and asset B.
First we calculate rt′rt by multiplying the transpose of the row vector rt by itself. Use the
following formula in a new column for each day
3|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

=MMULT(TRANSPOSE(log_returns_t), log_returns_t)
Then we calculated the estimated covariance matrix Σ^t in separate cells. We also input lamba
value 0.92 in a separate cell.
After that we calculate the two parts of the EWMA formula in Question 2, Answer spreadsheet
in F column and G-I Column.
Finally we sum the two parts to get the forecasted covariance matrix for 02-11-2023 Σ^t+1
Which is

Forecast of the covariance matrix

for 02-11-2023 Σ^t+1
- -
0.294636288 -0.3463 0.97952
- -
-0.34629916 0.01648 0.29464
- - -
0.979519156 0.31716 0.22186

Question 1.3
Find the weights wA and wB that lead to minimum variance portfolio for 02-11-2023 giving
your forecast of the covariance matrix in 1.2 and your answer in 1.1.
Show your calculation in details.
Answer 1.3:
Given Values:
Mean A=−0.011201831
Mean B=−0.0031646
Variance A=0.300999519
Variance B=0.082197492
Covariance AB=−0.024107041
The portfolio variance is given by:

σ2 p = w 2 Aσ2 A + w 2 Bσ2 B + 2wAwBσAB

σ2 p = w 2 Variance A + w 2 BVariance B + 2wAwBCocariance AB

Substitute Values:

σ2 p = w 2 · 0.300999519 + w 2 B · 0.082197492 + 2wAwB · 0.024107041

Substitute wA in Terms of wB:

4|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Using the constraint wA+wB=1, substitute wA=1−wB into the portfolio variance formula.
Simplify the Objective Function:
Combine like terms and simplify the expression.
Take the Derivative:
Take the derivative of the simplified objective function with respect to wB.
Set the Derivative to Zero:
Set the derivative equal to zero and solve for wB.
Check Second-Order Condition:
Take the second derivative and check its sign.

σ2 p = w 2 Variance A + w 2 BVariance B + 2wAwBCocariance AB

σ2 p = w 2 · 0.300999519 + w 2 B · 0.082197492 + 2wAwB · 0.024107041

σ2 p = 0.300999519 − .600314338wB + 0.281512533w 2 B − 0.048214083wB

Combine like terms:

σ2 p = 0.281512533w 2 B − 0.648528421wB + 0.300999519

Take the Derivative:

dσ2 p
= 0.563025066wB − 0.648528421 = 0
dwB
Solve for wB:
0.648528421
wB = ≈ 1,151864
0.563025066
Check Second-Order Condition:
The second derivative is positive, indicating a minimum.
Solve for wA:
Using the constraint wA+wB=1:

wA = 1 − wB

wA = 1 − 1,151864 = −0,151864

Question 2.1 Write the matrix X in the context of model (5). What is the dimension of this
matrix?
Answer 2.1:

5|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

The matrix X is constructed by adding a column of ones for the intercept term (β0) and
appending the columns for x1 and x2.

1 x1 x2
1 0.914763 1.85633
1 -0.79394 0.029152
1 -0.99536 -1.5624
1 -1.56614 -0.52496
X= 1 0.024532 0.290483
1 -0.44527 -0.17613
1 -0.69433 -0.47672
1 0.837417 -0.88305
1 0.189055 -0.34813
1 1.268892 -0.08649

The dimension of this matrix is 10×3 (10 observations, 3 columns).

Question 2.2 What is the dimension of the matrix y.

Answer 2.2:
The matrix y is the column vector of the regressand (response variable) y.
y
12.3156
0.211112
-6.45993
-5.05396
4.015937
0.438256
-1.57065
1.098472
1.767314
5.796691

The dimension of this matrix is 10×1 (10 observations, 1 column).

Question 2.3 Find and write the matrix (X′X)−1. What is the dimension of this matrix?
Hint: In R, matrix inversion can be easily performed using inv() from the package matlib.

6|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Answer 2.3:
To find (X′X)−1, we need to perform matrix multiplication in Excel. Which I have shown in
excel spradesheet.
Transpose of X (X′):
Create a new matrix with the transpose of X.
12.3156 0.211112 -6.45993 -5.05396 4.015937 0.438256 -1.57065 1.098472 1.767314 5.796691
0.914763 -0.79394 -0.99536 -1.56614 0.024532 -0.44527 -0.69433 0.837417 0.189055 1.268892
1.85633 0.029152 -1.5624 -0.52496 0.290483 -0.17613 -0.47672 -0.88305 -0.34813 -0.08649

Matrix Multiplication (X′X):

Multiply the transposed X by X.
275.7101 35.0467 35.36555
35.0467 7.93872 3.553758
35.36555 3.553758 7.414592

Matrix Inversion ((X′X)^-1:

Invert the resulting matrix.
0.018346 -0.05324 -0.06199
-0.05324 0.314894 0.103028
-0.06199 0.103028 0.381145

The dimension of (X′X)−1 is 3×3.

Question 2.4 Find and write the matrix X′y. What is the dimension of this matrix?
Answer 2.4:
Here, we multiply the X matrix with the y matrix.
275.7101
35.0467
35.36555

The matrix multiplication can be done because the number of columns in matrix X is equal
to the number of rows in matrix y (10), and the resulting matrix has the number of rows of X,
(3) and the number of columns of y (1).
This matrix is a column vector with the dimension (3x1)

7|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Question 2.5 Now multiply (X′X)−1 and X′y to find ˆ β. What is the dimension of ˆ β?
Explain.
Answer 2.5:
Perform the matrix multiplication:
1.0925
-1.2075
0.5175

The dimension of β is 3×1. This is because it consists of the estimates for β, β1, and β2.

Question 2.6 Compare your calculation in 2.5 with a built-in command such as lm() in R or
the respective in Excel. Are they exactly the same?
Answer 2.6:
The Excel command Linest() is used to find βˆ.

The results are exactly the same, which confirms the results found by using the OLS
formula.

8|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Part 2-Empirical Study

Introduction:
The relationship between USA interest rates and investment growth is a topic of ongoing
debate and research within the fields of economics and finance. At first glance, it may seem
like these two variables are unrelated, but in fact, they are deeply interconnected and can have
significant effects on each other. For investors, understanding this relationship is essential for
making rational and informed decisions about allocation of their capital. For policymakers, the
relationships are critical for the designing of monetary and fiscal policies that can effectively
stimulate economic growth and maintain price stability. Central banks worldwide use the
flexibility of interest rates as a tool to manage inflation and the economy if there are signs of
an economic slowdown and rising unemployment. If the economy is overheating, the central
banks can increase the interest rate to cool down the economy in hopes of avoiding recession.
When these economic factors change, the companies worldwide are affected both directly and
indirectly. The performance of public companies are reflected in their stock price, which are
usually affected alongside with the company’s overall performance. The thesis that forms the
basis for this paper is that large companies perform better than mid-sized and small companies
during periods of elevated interest rates and inflation. Our overall belief is that large companies
have solid relationships with their customers and have the advantage of economies of scale.
Smaller companies do not have decade-long relationships with customers and their businesses
might not take up that much space in the customers’ minds. Furthermore, they cannot just raise
their prices without the risk of losing a significant number of customers. Large companies have
easier access to the capital markets too, given their large amount of assets and their long
relationships with banks. In this empirical analysis paper, we will delve into the intricate and
often dynamic relationship between stock returns, inflation, and interest rates. We will analyze
the performance of different sized companies from different parts of the world during periods
of changing interest rates and inflation to test our thesis that the stock returns of large
companies are less negatively affected by increasing interest rates and inflation than smaller
companies.

Nowadays in globalized world relationship between interest rates and investments has a great
demand to financialist, economist, managers etc. In this globalized world USA is the top
country who plays a key role to shape this economy. In 2013-2022 interest rates in United
States of America had several fluctuations. They done this to reconstruct investment strategizes
in every sectors. In this empirical study we focused on the connection between United States
of America’s interest rates and investment growth in oil, telecommunication, and food
industries. All of these industries are different in their field and their investment decision is also
different depends on interest rate. The oil industry, which is very important to the world's
energy markets, is volatile due to a combination of geopolitical and economic concerns. On the
other hand, the telecommunications sector is an very important part of the contemporary

9|Page
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

information era and is subject to changes in regulations and technical improvements. In the
meanwhile, shifting consumer tastes and global supply chain issues affect the food business,
which is a vital sector for human nourishment.
From 2013-2022, in these ten years of period we will conduct correlations and causal
relationships between interest rates up and down and investment growth and decrease in these
three industries. This analysis will help us to determine how cost of capital changes effect in
decision making, capital expenditure etc in these oil, telecommunication and food industry.
Our goal as we set out on this empirical study is to add significant knowledge to the
conversation about how interest rates and industry investments behave each other. In addition
to advancing our knowledge of economic dynamics, our research offers useful advice for
companies, investors, and decision-makers negotiating the complex web of financial choices
in a quickly changing economic environment.
We will start by presenting the data we have gathered, which will be used throughout the article,
along with the techniques we employed to process the information and develop our thesis. This
will give the reader and us a strong basis on which to build our knowledge of the ways in which
interest rates and investment behavior interact. Next, we will conduct the analysis of our data,
examining how investment and interest rates have interacted in the past ten years for our
selected companies in oil, telecommunication and food industry. We will also be able to say
something about how they may be expected to behave in the future. By the end of this paper,
we aim to have provided a thorough and nuanced understanding of the relationship between
investment and interest rates. Through our analysis, we hope to shed light on the complex and
multifaceted nature of this relationship and to provide insights that may be useful for investors
and policymakers.

Scope and Limitations:

Since our project on USA interest and investment growth of 15 companies in three industries
we still have more scope to find further information. But because of the time limitation,
information, accessibility, scarcity of data availability we face difficulties to complete the
project on best way.

Methodology:

Data Construction:
Our study focuses on three major industries—Oil, Telecommunication, and Food—spanning
the years 2013 to 2022. For each industry, we have selected five key companies, providing a
representative sample for analysis. The companies include Chevron, Exxon Mobil,
ConocoPhillips, Marathon Petroleum, and Valero Energy in the Oil sector; Verizon, T-Mobile,
Comcast Corp, AT&T, and Charter Communications in the Telecommunication sector; and
Campbell Soup Company, General Mills, Mondelez International, PepsiCo, and Conagra in the
Food sector.

10 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Dataset Description:
To facilitate our analysis, we constructed panel datasets in long format, organizing observations
chronologically across time. Each dataset corresponds to one industry Oil, Telecommunication,
or Food. These datasets contain information on total investments (dependent variable) and U.S.
interest rates (independent variable) for each company, creating a comprehensive framework
for our analysis.
Independent Variable in Dataset:

Year Interest Rate (%)

2013 1.5
2014 1.4
2015 2.2
2016 2.5
2017 2.2
2018 2.4
2019 3.4
2020 2.2
2021 -1.2
2022 1.58

Dependent Variable (Growth) in Dataset:

Oil Industry:

Chevron Exxon Mobil

Total Total
investments investments
Year Growth Year Growth
(millions of (millions of
dollars) dollars)
2013 25,502 2013 36,328
2014 26,912 6% 2014 35,239 -3%
2015 27,110 1% 2015 34,245 -3%
2016 30,250 12% 2016 35,102 3%
2017 32,497 7% 2017 39,160 12%
2018 35,546 9% 2018 40,790 4%
2019 38,688 9% 2019 43,164 6%
2020 39,052 1% 2020 43,515 1%
2021 40,696 4% 2021 45,195 4%
2022 45,238 11% 2022 34,718 -23%

11 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

ConocoPhillips Marathon Petroleum

Total Total
investments investments
Year Growth Year Growth
(millions of (millions of
dollars) dollars)
2013 23,907 2013 1,800
2014 24,335 2% 2014 1,744 -3%
2015 20,490 -16% 2015 1,570 -10%
2016 21,091 3% 2016 1,659 6%
2017 9,599 -54% 2017 1,840 11%
2018 9,329 -3% 2018 2,089 14%
2019 8,687 -7% 2019 2,531 21%
2020 8,017 -8% 2020 2,621 4%
2021 7,113 -11% 2021 3,043 16%
2022 8,225 16% 2022 1,838 -40%

Valero Energy
Total investments
Year (millions of Growth
dollars)
2013 4,292
2014 3,689 -14%
2015 4,114 12%
2016 4,816 17%
2017 5,850 21%
2018 4,850 -17%
2019 2,938 -39%
2020 2,490 -15%
2021 2,467 -1%
2022 2,738 11%

12 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Telecommunication Industry:

Varizon T Mobile
Total Total
investments investments
Year Growth Year Growth
(millions of (millions of
dollars) dollars)
2013 16,604 2013 4,025
2014 17,191 4% 2014 4,317 7%
2015 17,775 3% 2015 4,724 9%
2016 17,059 -4% 2016 4,702 0%
2017 17,247 1% 2017 5,237 11%
2018 16,658 -3% 2018 5,541 6%
2019 17,939 8% 2019 6,391 15%
2020 18,192 1% 2020 11,034 73%
2021 20,286 12% 2021 12,326 12%
2022 23,087 14% 2022 13,970 13%

Comcast Crop AT & T

Total Total
investments investments
Year Growth Year Growth
(millions of (millions of
dollars) dollars)
2013 5,403 2013 21,228
2014 6,154 14% 2014 21,433 1%
2015 7,034 14% 2015 20,015 -7%
2016 7,596 8% 2016 22,408 12%
2017 7,952 5% 2017 21,550 -4%
2018 7,716 -3% 2018 21,251 -1%
2019 6,909 -10% 2019 19,635 -8%
2020 6,605 -4% 2020 15,675 -20%
2021 6,930 5% 2021 16,527 5%
2022 7,568 9% 2022 19,626 19%

13 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Charter Communications
Total
investments
Year Growth
(millions of
dollars)
2013 1,854
2014 2,221 20%
2015 1,840 -17%
2016 7,545 310%
2017 8,681 15%
2018 9,125 5%
2019 7,195 -21%
2020 7,415 3%
2021 7,635 3%
2022 9,376 23%

Food Industry:

Campbell Soup Company General Mills

Total Total
investments investments
Year Growth Year Growth
(millions of (millions of
dollars) dollars)
2013 761 2013 -40.40
2014 821 8% 2014 -54.90 36%
2015 805 -2% 2015 -102.40 87%
2016 691 -14% 2016 63.90 -162%
2017 666 -4% 2017 3.30 -95%
2018 631 -5% 2018 -17.30 -624%
2019 644 2% 2019 0.10 -101%
-
2020 568 -12% 2020 -48.00 48100%
2021 702 24% 2021 -76.40 59%
2022 534 -24% 2022 14.70 -119%

14 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Mondelez International Pepsico

Total Total
investments investments
Year Growth Year Growth
(millions of (millions of
dollars) dollars)
2013 4,466 2013 104
2014 3,932 -12% 2014 -17 -116%
2015 8,902 126% 2015 83 -588%
2016 9,484 7% 2016 -39 -147%
2017 10,973 16% 2017 157 -503%
2018 9,908 -10% 2018 -77 -149%
2019 11,430 15% 2019 -30 -61%
2020 12,802 12% 2020 235 -883%
2021 12,724 -1% 2021 -192 -182%
2022 8,538 -33% 2022 -120 -38%

Conagra
Total
investments
Year Growth
(millions of
dollars)
2013 15.20
2014 12.60 -17%
2015 853.00 6670%
2016 910.80 7%
2017 1,305.00 43%
2018 700.00 -46%
2019 245.90 -65%
2020 241.00 -2%
2021 263.40 9%
2022 230.80 -12%

Regression Analysis:
Our analytical approach involves single regression analysis for each industry. We are doing this
single regression analysis with industry average. We adopt a single regression model with
investment growth of U.S three industries’ as the dependent variable and U.S. interest rates as
the independent variable. The model is expressed as follows:
y = mx + c,
where

15 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

m indicates slope
c indicates y-intercept
x indicates independent variable
y indicates dependent variable

We assume this equation to be the Data Generating Process (DGP) for y, and that y is created
by this mechanism in the real world (Wooldridge, 2015). This will provide us with equations
for each tier of industries and give us an idea of how they are performing under certain levels
of interest rates. Our independent variables are the interest rates (x) and our dependent variables
are the average investment growth of industries (y). We want to estimate the slope perimeters
to analyze the change in y given a unit change in x.
Diagnostic Tests:
We conduct following three crucial diagnostic tests to validate our regression results:
1. Jarque Bera Test:
A test for normalcy that is a variation of the Lagrange multiplier test is the Jarque-Bera test.
Many statistical tests, such as the t test and the F test, rely on the assumption of normalcy.
To verify normalcy, the Jarque-Bera test is typically conducted before to one of these tests.
Since alternative normality tests become unreliable for big n values (Shapiro-Wilk, for
instance, becomes unreliable for n greater than 2,000), it is typically used to huge data sets.
To be more precise, the test compares the data's skewness and kurtosis to check if it fits
a normal distribution. The data may be in any of the following formats:
Time Series Data.
Errors in a regression model.
Data in a Vector.
A normal distribution has a kurtosis of three, which indicates how much of the data is
in the tails and how "peaked" the distribution is, and a skew of zero, which indicates
that it is entirely symmetrical around the mean. To conduct the test, one does not need
to know the data's mean or standard deviation.
2. Heteroskedasticity Test:
In statistics, the term heteroscedasticity is the opposite of homoscedasticity which is used to
characterize situations in which the variance of the model's errors varies for each observation.
This is because a fundamental tenet of modeling is frequently that the variances and the model's
errors have the same distribution. This is especially true when it comes to linear regression or
time series analysis.

16 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Because the model's errors, also known as residuals, in linear regression analysis are not
homoskedastic, the model coefficients estimated using ordinary least squares (OLS) are neither
unbiased nor those with the least variance. Their variance cannot be reliably estimated.

• It is thus required to do a test for heteroscedasticity if it is believed that the variances

are not homogenous (a representation of the residuals versus the explanatory variables
may indicate heteroscedasticity). The null and alternative hypotheses for the following
tests have been developed:

White test and modified White test

How can the White test be used to identify heteroscedasticity? White (1980) created this
technique to find instances of heteroscedasticity that undermine the accuracy of traditional
estimators of linear regression parameters. Although the concept is similar to Breusch and
Pagan's, it is predicated on less robust hypotheses on the shape of heteroscedasticity. As a
consequence, the explanatory factors, as well as the squares and cross-products of those
variables, are used to regression the quadratic errors.

Goodness of Fit Test:

There are several reasons why goodness-of-fit tests are significant in statistics. This test aids
in evaluating how well a statical model fits a given collection of empirical data. This goodness
of fit test's primary goal is to determine whether or not the observed data are compatible with
the statical model that is being assumed. A good model may be chosen from a variety of
models by using the goodness fit test.

Finding market abnormalities or outliers that may be affecting how well the model fits the
data may also be done with this test. Outliers may need to be removed or treated differently
since they might have a substantial impact on the model fit. Sometimes outliers are hard to
spot unless they are part of an analytical model.

Tests for goodness-of-fitness might also reveal details on the data's variability and the model's
predicted parameters. Predictions and a knowledge of the behavior of the system being
modeled can both benefit from this information. The model unique to the dataset being tested,
the residuals being computed, and the p-value for possibly extreme data may need to be refined
based on the data being fed into the model.
By implementing this methodology, we aim to provide a comprehensive understanding of how
U.S. interest rates influence investment growth in the Oil, Telecommunication, and Food
industries across different company sizes from 2013 to 2022.

17 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Analysis of empirical results

Assumptions:

1. Linear in parameters
Since this is a linear regression model, the coefficients are multiplied by the independent
variables, X1 (interest rates), to determine whether there is a linear relationship between Y
(investment growth) and the independent variables. Scatter plot diagrams are the most
straightforward method for determining whether or not this assumption holds true for our
model. This makes it possible for us to see whether or not the assumption is met visually.
There may be a linear relationship if the points of the X's and Y's are near to a straight line.
There may not be a linear relationship if the points are dispersed and do not form a relative
straight line. Finding a straight line that minimizes the sum of the residuals is the aim of
linear regression.
Scatterplots of the following

Residuals
0.1

0.08

0.06

0.04
Residuals
0.02 Linear (Residuals)
0
0 1 2 3 4 5 6 7 8 9 10
-0.02

-0.04

-0.06

18 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Residuals
0.6

0.5

0.4

0.3

0.2 Residuals
0.1 Linear (Residuals)

0
0 2 4 6 8 10
-0.1

-0.2

-0.3

Residuals
0.8

0.6

0.4

0.2

0 Residuals
0 2 4 6 8 10
-0.2 Linear (Residuals)

-0.4

-0.6

-0.8

-1

2. Correct specification
Our model links our independent variables X (interest rates) to the dependent variable y
(invest growth). No other variable possesses the ability to consistently impact our outcome.
Every variable in our model serves as a pertinent explanatory variable. In other words, the
model has no redundant, superfluous, or missing predictors. Model misspecification occurs
when this is done incorrectly, with coefficients being assigned to variables that do not exist in
the model's data set, leading to incorrect results.

19 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

The way that interest rates and investment growth are related worries us. Our slope with
respect to our coefficients is neither over- nor under-specified for any of the three models
because these are interconnected.

Oil Industry

Regression Statistics
Multiple R 0.114476666
R Square 0.013104907
Adjusted R Square -0.127880106
Standard Error 0.042379532
Observations 9

1. Multiple R:
• The Multiple R which is the correlation coefficient between the actual values of
the dependent variable and the predicted values. The value is nearly 0.1145. It
presents the solidity and path of the linear correlation between the independent
and dependent variables.
2. R Square (R²):
• The value of R Square is the coefficient of determination. R² is roughly 0.0131,
indicating that only about 1.31% of the variability in the dependent variable can
be describe by the independent variables in the model.
3. Adjusted R Square:
• The Adjusted R Square is a revised model of R² that adjusts for the number of
independent variables in the model. It penalizes the inclusion of irrelevant
variables that do not contribute much to the interpretation of the dependent
variable. In this case, the Adjusted R Square is approximately -0.1279, which
suggests that the model is not so well-adapted to the data.
4. Standard Error:
• The Standard Error is a evaluation of the average distance between the stated
values as well as the values forecasted by the model. In our case, it is around
0.0424.
5. Observations:
• This shows the number of data points or observations used in the regression
analysis. In this model, there are 9 observations.
It's important that an Adjusted R Square value below zero is uncommon and shows minor issues
with the model, such as overfitting or containing some irrelevant variables. Additionally, the

20 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

low R Square value suggests that the model does not explain whole of the variability in the
dependent variable.
ANOVA
df SS MS F Significance F
Regression 1 0.000166945 0.000166945 0.092952483 0.769321884
Residual 7 0.012572173 0.001796025
Total 8 0.012739118

1. Regression:
• df (Degrees of Freedom): df equals to 1, indicating the number of independent
variables in the model which is 1 in simple linear regression.
• SS (Sum of Squares): The sum of squared distinct between the forecasted values
and the mean of the dependent variable. In this case, SS = 0.000166945.
• MS (Mean Square): The mean square, calculated as SS divided by the degrees
of freedom. Here MS is 0.000166945.
• F (F-statistic): The F-statistic is a ratio of the variance explained by MS
Regression to the variance MS Residual. Here F is 0.092952483.
• Significance F (p-value): This is the p-value associated with the F-statistic,
Which is testing the null hypothesis means all the regression coefficients are
equivalent to zero. A high p-value (0.769321884) suggests that there is not
sufficient Proof to reject the null hypothesis.
2. Residual (Error):
• df (Degrees of Freedom): The df associated with the residuals or error term is
7, showing the number of observations minus the number of parameters
estimated in the model.
• SS (Sum of Squares): The sum of squared distinctness between the observed
values with the predicted values. Here SS is 0.012572173.
• MS (Mean Square): The mean square for the residuals, Done through SS divided
by the degrees of freedom. MS is 0.001796025.
3. Total:
• df (Degrees of Freedom): The total degrees of freedom, which is the combined
degrees of freedom for the regression and residuals. Here df is 8.
• SS (Sum of Squares): The total sum of squares, showing the total variability in
the dependent variable. SS = 0.012739118.
Interpretation:
• Regression (Model):

21 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

• The F-statistic tests the general significance of the regression model. In this
case, since the F-statistic is not remarkably different from 1 , there is little proof
to reject the null hypothesis that the regression model has little descriptive
power.
• Residual (Error):
• The residual sum of squares (SS) calculates the inexplainable variability in the
dependent variable. A negligible residual sum of squares means a better fit of
the model to the data.
• Total:
• The total sum of squares means that the overall variability in the dependent
variable. It is the sum of the regression and residual sums of squares.
In summary, based on the ANOVA table, the simple linear regression model does not appear to
have a statistically remarkable overall effect, as indicated by the non-significant p-value
associated with the F-statistic. This represents that the model may not be giving a relevant
description of the variability in the dependent variable.

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 0.0007239 0.025912529 0.027935291 0.9784935 -0.060549521 0.061997269 -0.060549521 0.061997269
Interest Rate (%) -0.0035736 0.011721194 -0.304881097 0.769321884 -0.03128979 0.024142649 -0.03128979 0.024142649

Intercept:
• Intercept Coefficient (0.000723874): The intercept is the output of the dependent
variable when the independent variable is zero. Here, when the independent variable
(X) is zero, the predicted value of the dependent variable (Y) is approximately
0.000723874. This value is the y-intercept of the regression line.
• Standard Error (0.025912529): The standard error is a estimate of the variability or
precision of the estimated intercept.
• t Stat (0.027935291): The t-statistic is the coefficient divided by its standard error. It
shows how many standard errors the coefficient is away from zero.
• P-value (0.9784935): The p-value related with the intercept check the null hypothesis
that the intercept is equal to zero. A high p-value means that the intercept may not be
notably different from zero.
• 95% Confidence Interval (Lower 95% = -0.060549521, Upper 95% = 0.061997269):
This gives a scale within which we can be logically confident that the true population
parameter (intercept) lies.
Interest Rate (%):
• Interest Rate Coefficient (-0.00357357): In our case, for every one-unit rise in the
independent variable (X), the predicted value of the dependent variable (Y) goes down

22 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

by approximately 0.00357357. The negative sign indicates a negative relation between

the independent and dependent variables.
• Standard Error (0.011721194): The standard error is a measure of the variability of the
estimated coefficient.
• t Stat (-0.304881097): The t-statistic is the coefficient divided by its standard error. It
indicates how many standard errors the coefficient is away from zero.
• P-value (0.769321884): The p-value associated with the coefficient for Interest Rate
tests the null hypothesis that this coefficient is equal to zero. A high p-value suggests
that this coefficient may not be significantly different from zero.
• 95% Confidence Interval (Lower 95% = -0.03128979, Upper 95% = 0.024142649):
This provides a scale within which we can be logically confident that the true
population parameter for the Interest Rate coefficient lies.
Interpretation:

• The equation for the regression line is Y^=Intercept+(Slope×X), Substituting the values:
Y^=0.000723874−(0.00357357×X). This equation narrates the linear relationship
within the independent variable (X) and the predicted values of the dependent variable
(Y). The intercept is the predicted value of Y when X is zero. The slope is the rate of
change in Y for a unit change in X.
• For the Intercept, the p-value (0.9784935) is high, showing that the intercept may not
be remarkably different from zero. The 95% confidence interval includes zero,
strengthening this explanation.
• For the Interest Rate coefficient, the p-value (0.769321884) is high, suggesting that the
coefficient may not be remarkably different from zero. The 95% confidence interval as
well add zero.
In summary, based on the findings, there isn't significant evidence to show that either the
intercept or the coefficient for Interest Rate is significantly different from zero.

23 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Telecommunication industry

Regression Statistics
Multiple R 0.05975574
R Square 0.003570748
Adjusted R Square -0.138776288
Standard Error 0.219794032
Observations 9

1. Multiple R (0.05975574):
• Multiple R, which is also known as the correlation coefficient, calculates the
solidity and path of the linear relationship between the independent variable and
the dependent variable. In this case, the value is approximately 0.0598, meaning
a very weak positive correlation.
2. R Square (0.003570748):
• R Square, which presents the proportion of the variance in the dependent
variable that is described by the independent variables. Here, only roughly
0.36% of the variability in the dependent variable is explained by the
independent variable.
3. Adjusted R Square (-0.138776288):
• In this case, the Adjusted R Square is approximately -0.1388. A negative
Adjusted R Square is not common and represents that the model may not be
well-fitted to the data or that there may be issues such as overfitting or including
unnecessary variables.
4. Standard Error (0.219794032):
• Standard Error is used to measure the average distance between the observed
values and the values predicted by the model. In this case, it is high at
approximately 0.2198.
5. Observations (9):
• The number of observations used in the regression analysis is 9 .
Interpretation:
• The Multiple R value (0.0598) shows a very weak positive linear relationship between
the independent variables and the dependent variable. The firmness of this relationship
is extremely low.

24 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

• The R Square value (0.00357) indicates that only a very small amount of variability in
the dependent variable is described by the independent variables. This advice that the
model may not be giving a good fit to the data.
• The negative Adjusted R Square value (-0.1388) is uncommon
• The Standard Error (0.2198) is relatively high, indicating that the model's predictions
may have a small amount of mistakes.
In summary, In accordance with statistics, the simple linear regression model does not seem to
be a strongly fit for the data, and the independent variables may not be describing much of the
variability in the dependent variable.
ANOVA
df SS MS F Significance F
Regression 1 0.001212 0.001212 0.025085 0.878628258
Residual 7 0.338166 0.048309
Total 8 0.339378

1. Regression:
• df (Degrees of Freedom): The degrees of freedom related with the regression
model. In this case, df is 1, indicating the number of independent variables in
the model.
• SS (Sum of Squares): The sum of squared distinct the predicted values and the
mean of the dependent variable. In our case, SS is 0.001211833.
• MS (Mean Square): The mean square is calculated as SS divided by the degrees
of freedom. MS = 0.001211833.
• F (F-statistic): The F-statistic is a ratio of the variance explained by MS
Regression to the variance not explained by the MS Residual. In our case, F =
0.025084810.
• Significance F (p-value): This is the p-value related with the F-statistic, testing
the null hypothesis that all the regression coefficients are equal to zero. A high
p-value (0.878628258) means that there is insufficient evidence to reject the null
hypothesis.
2. Residual (Error):
• df (Degrees of Freedom): The degrees of freedom related with the residuals or
error term. here, df is 7, showing the number of observations minus the number
of parameters estimated in the model.
• SS (Sum of Squares): The sum of squared differences between the observed
values and the predicted values. In our case, SS equals 0.338165916.
• MS (Mean Square): The mean square for the residuals, calculated as SS divided
by the degrees of freedom. In this case MS is 0.004830942.

25 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

3. Total:
• df (Degrees of Freedom): The total degrees of freedom, which is the sum of the
degrees of freedom for the regression and residuals. In this case, df is 8.
• SS (Sum of Squares): The total sum of squares, which representing the general
variability in the dependent variable. In our case, SS equals to 0.339377749.
Interpretation:
• Regression (Model):
• In this case, As the F-statistic is not significantly different from 1, there is not
enough proof to reject the null hypothesis that the regression model has little
explanatory power.
• Residual (Error):
• A negligible residual sum of squares shows a better fit of the model to the data.
• Total:
• The total sum of squares indicates the overall variability in the dependent
variable. It is the sum of the regression and residual sums of squares.
To sum up, based on the provided ANOVA table, the simple linear regression model does not
appear to have a statistically remarkable overall effect, as indicated by the non-significant p-
value associated with the F-statistic. This suggests that the model may not be providing a strong
relevant explanation of the variability in the dependent variable.

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%Lower 95.0% Upper 95.0%
Intercept 0.105860021 0.134390801 0.787703 0.45671 -0.2119237 0.423644 -0.211924 0.423643769
Interest Rate (%) 0.00962802 0.060789922 0.158382 0.878628 -0.1341173 0.153373 -0.134117 0.153373345

Intercept:
• Intercept Coefficient (0.105860021): This is the estimated value of Y when X is zero.
The intercept is about 0.1058. This indicates that when X is zero, the estimated value of
Y is 0.1058.
• Standard Error (0.134390801): The standard error, which is a tool measure of the
variability or precision of the estimated intercept.
• t Stat (0.78770288): The t-statistic is the coefficient which is divided by its standard
error. It indicates how many standard errors the coefficient is away from zero.
• P-value (0.456709763): The p-value connected with the intercept tests the null
hypothesis that the intercept is equal to zero. A high p-value (more than 0.05) suggests
that there is not sufficient proof to reject the null hypothesis.

26 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

• 95% Confidence Interval (Lower 95% = -0.211923727, Upper 95% = 0.423643769):

This provides a rang within which we can be logically confident that the true population
parameter (intercept) lies.
Interest Rate (%):
• Interest Rate Coefficient (0.00962802): This represents the change in Y for a one-unit
change in X. Means that every one-unit rise in the independent variable X, the dependent
variable Y is expected to rise by approximately 0.0096 units. Conversely, for every one
unit down in X, Y is expected to decrease by the same amount.
• Standard Error (0.060789922): The standard error is a measure of the variability or
precision of the estimated coefficient.
• t Stat (0.15838185): The t-statistic is the coefficient divided by its standard error. It
indicates how many standard errors the coefficient is away from zero.
• P-value (0.878628258): The p-value associated with the coefficient for "Interest Rate
(%)" tests the null hypothesis that this coefficient is equal to zero. A high p-value
(greater than 0.05) recommends that there is not insufficient proof to reject the null
hypothesis.
• 95% Confidence Interval (Lower 95% = -0.134117304, Upper 95% = 0.153373345):
This gives a range within which we can be reasonably confident that the true population
parameter for the "Interest Rate (%)" coefficient lies.
Interpretation:

• The regression equation Y=0.105860021+0.00962802⋅X , This equation make

predictions for Y based on different values of X
• For the Intercept, the p-value (0.456709763) is high, which suggests that the intercept
may not be remarkably different from zero. The 95% confidence interval includes zero,
reinforcing this interpretation.
• For the Interest Rate coefficient, the p-value (0.878628258) is high, suggesting that the
coefficient may not be highly different from zero. The 95% confidence interval also
includes zero.
• The t-stats for both intercept and the Interest Rate coefficient are low, further indicating
that these coefficients are not significantly different from zero.
To sum up, based on the provided results, there isn't strong proof to suggest that either the
intercept or the coefficient for Interest Rate is significantly different from zero.

27 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Food Industry

Regression Statistics
Multiple R 0.412962326
R Square 0.170537883
Adjusted R Square 0.052043295
Standard Error 0.544227304
Observations 9

1. Multiple R (0.412962326):
• Here, the value is nearly 0.413, which indicates a moderate positive correlation.
2. R Square (0.170537883):
• In our case, about 17.05% of the variability in the dependent variable is
described by the independent variable.
3. Adjusted R Square (0.052043295):
• It is the adjusted R Square which is a modified version of R Square that adjusts
for the number of independent variables in the model. Here, the adjusted R
Square is lower than the R Square, which may indicate that some of the
independent variable's explanatory power is due to chance.
4. Standard Error (0.544227304):
• Standard Error is used to measure the average distance between the observed
values and the values predicted by the model. In this case, it is approximately
0.5442.
5. Observations (9):
• The number of data points used in the regression analysis. Here, there are 9
observations.
Interpretation:
• The Multiple R value (0.413) suggests a moderate positive linear relationship between
the dependent variable and the independent variable. In this case, strength of this
relationship is moderate.
• The R Square value (0.1705) shows that approximately 17.05% of the variability in the
dependent variable is explained by the independent variable. This implies a moderate
level of explanatory power.
• The Adjusted R Square value (0.0520) is lower compared to the R Square indicating
that some of the apparent explanatory power is due to chance or noise in the data.
• The Standard Error (0.5442) gives a measure of the average error in the expectations.
A lower standard error shows a more precise model.

28 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

To sum up, according to the supplied statistics, the simple linear regression model appears to
have a moderate level of explanatory power, where the adjusted R Square suggests caution,
ANOVA
df SS MS F Significance F
Regression 1 0.426268268 0.426268 1.439204 0.269292818
Residual 7 2.073283507 0.296183
Total 8 2.499551775

The ANOVA (Analysis of Variance) table

1.Regression:
• df (Degrees of Freedom): The degrees of freedom connected with the regression
model. Here, df = 1, indicating the number of independent variables in the
model.
• SS (Sum of Squares): The sum of squared distinctions between the anticipated
values and the mean of the dependent variable. In this case, SS = 0.426268268.
• MS (Mean Square): The mean square, which is calculated as SS divided by the
degrees of freedom. MS = 0.426268268.
• F (F-statistic): The F-statistic is a ratio of the variance explained by the MS
Regression to the variance not explained by MS Residual. In this case, F equals
to 1.43920398.
• Significance F (p-value): This is the p-value connected with the F-statistic,
which test the null hypothesis that all the regression coefficients are equal to
zero. A high p-value (0.269292818) means that there is insufficient evidence to
reject the null hypothesis.
2. Residual (Error):
• df (Degrees of Freedom): The degrees of freedom connected with the residuals
or error term. In this case, df = 7, indicating the number of observations minus
the number of parameters estimated in the model.
• SS (Sum of Squares): The sum of squared differences between the observed
values and the predicted values. In our case, SS equals to 2.073283507.
• MS (Mean Square): The mean square for the residuals is calculated as SS
divided by the degrees of freedom. Here, MS = 0.296183358.
3. Total:
• df (Degrees of Freedom): which is the sum of the degrees of freedom for the
regression and residuals. Here, df = 8.
• SS (Sum of Squares): The total sum of squares, which represents the general
variability in the dependent variable. In our case, SS = 2.499551775.

29 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Interpretation:
• Regression (Model):
• F-statistic tests the overall importance of the regression model. In this case, as
the F-statistic is not notably different from 1, there is limited evidence to reject
the null hypothesis that the regression model has little explanatory power.
• Residual (Error):
• The residual sum of squares (SS) that measures the unexplained variability in
the dependent variable. A negligible residual sum of squares reflects a better fit
of the model to the data.
• Total:
• The total sum of squares indicates the overall variability in the dependent
variable. This is the sum of the regression and residual sums of squares.
To sum up, based on the provided ANOVA table, the simple linear regression model does not
appear to have a statistically remarkable overall effect, which is indicated by the non-significant
p-value associated with the F-statistic. It suggests that the model may not be providing a strong
meaningful justification of the variability in the dependent variable.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -0.39868394 0.332762189 -1.1981 0.269863 -1.185541485 0.3881736 -1.1855415 0.3881736
Interest Rate (%) -0.18057482 0.150520627 -1.19967 0.269293 -0.536499546 0.1753499 -0.5364995 0.1753499

Intercept:
• Intercept Coefficient (-0.398683942): The intercept is the value of Y while X is zero.
The intercept is about -0.399. This indicates that when X is zero, the estimated value of
Y is -0.399.
• Standard Error (0.332762189): The standard error, which is a tool to measure the
variability of the approximated intercept.
• t Stat (-1.198104699): The t-statistic is the coefficient which is divided by its standard
error. It indicates how many standard errors the coefficient is away from zero.
• P-value (0.26986321): The p-value connected with the intercept tests the null
hypothesis that the intercept is equal to zero. A high p-value (more than 0.05) suggests
that there is not enough proof to reject the null hypothesis.
• 95% Confidence Interval (Lower 95% = -1.185541485, Upper 95% = 0.3881736): It
provides a range within which it can be reasonably confident that the true data
parameter lies.
Interest Rate (%):
• Interest Rate Coefficient (-0.180574821): This represents the change in Y for a one-unit
change in X. Here, it is approximately -0.181, which implies that for every one-unit

30 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

increase in X, the estimated value of Y decreases by 0.181 units. In contrast, for every
one-unit decrease in X, the estimated value of Y increases by 0.181 units.
• Standard Error (0.150520627): The standard error is a tool that measures the variability
or precision of the approximated coefficient.
• t Stat (-1.199668279): The t-statistic is the coefficient divided by its standard error,
which indicates how many standard errors the coefficient is away from zero.
• P-value (0.269292818): The p-value associated with the coefficient for Interest Rate
tests the null hypothesis that the coefficient is equal to zero. A high p-value (more than
0.05) recommends that there is insufficient evidence to reject the null hypothesis.
• 95% Confidence Interval (Lower 95% = -0.536499546, Upper 95% = 0.175349903):
This gives a range in which we can be reasonably confident that the true population
parameter for the Interest Rate coefficient lies.
Interpretation:

• the regression equation Y=−0.398683942−0.180574821⋅X . The equation makes

predictions for Y based on different values of X.
• For the Intercept, the p-value (0.26986321) is high, which suggests that the intercept
may not be significantly different from zero. The 95% confidence interval includes
zero.
• For the Interest Rate coefficient, the p-value (0.269292818) is high, which suggests that
the coefficient may not be significantly distinct from zero. Here, 95% confidence
interval also includes zero.
• The t-stats for both the Intercept and the Interest Rate coefficient are small, which
further indicates that these coefficients are not significantly different from zero.
• To sum up, there isn't strong evidence to suggest that either the intercept or the
coefficient for Interest Rate is significantly different from zero.

31 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Diagnostics
Jarque Bera Test
The Jarque-Bera test is a test which is used to ascertain if a dataset has skewness and kurtosis
similar to a normal distribution
Oil Industry
Skewness 1.173057717
Excel Kurtosis 2.474093654
Kurtosis 5.474093654

JB 4.35952389
Jb 4.35952389
CV 1.386294361
P 0.113068444

Skewness: It measures the imbalance of the distribution. Here, the skewness is approximately
1.17, which indicates a moderate positive skew.
Kurtosis: Kurtosis is usually used to measure the tail heaviness of a distribution in contrast to
a normal distribution. Kurtosis of 3 is considered normal; values more than 3 indicate heavier
tails. The kurtosis is about 5.47, which indicates heavier tails than a normal distribution.
JB / Jb: The value of the Jarque-Bera test statistic in our case, it's nearly 4.36.
CV: Critical value at a certain significance level (5% or 1%). For this dataset, the critical value
is nearly 1.39.
P: P-value related to the Jarque-Bera test statistic. It is approximately 0.113.
Interpretation:
If P is smaller than a chosen significance level (commonly 0.05), we will reject the null
hypothesis. It means that here is enough information to say that the data is not normally
distributed.
If P is greater than the significance stage, we will accept the null hypothesis, which refers that
there is not enough information to conclude that the data significantly deviates from a normal
distribution.
In our case, with a p-value of approximately 0.113, which is greater than 0.05, we would fail
to reject the null hypothesis at the significance level of 0.05. So, based on this test, we don't
have enough evidence to say that the data deviates from a normal distribution. Considering the

32 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

value of p is relatively close to 0.05, there might be some indication of deviation, but it's not
strong enough to make a definitive conclusion.
Telecommunication Industry
Skewness 2.02219
Excel
Kurtosis 6.678267
Kurtosis 9.678267

JB 22.8586
Jb 22.8586
CV 1.386294
P 1.09E-05

Skewness: Here a positive skewness (like ours, at 2.022) implies that given data is skewed to
right.
Excel Kurtosis: It measures the "peakedness" of distribution compared to a normal distribution.
A value more than 3 indicates heavier tails than a normal distribution.
Kurtosis: It is another measure of the shape distribution. The higher kurtosis value (9.678)
indicates a distribution with heavier tails and a sharper peak in contrast to a normal distribution.
JB (Jarque-Bera): This is the test result. In our case, it's 22.8585998.
CV (Critical Value): This is critical value at a certain significance level. Data scientists use it
to ascertain whether the test statistic is within an acceptable range.
P (p-value): This is the probability of noticing the test if null hypothesis is true. Here a very
tiny p-value (like 1.08722E-05, which is essentially 0) shows strong evidence against null
hypothesis, meaning this data significantly comes from the normal distribution.
Here, since the p-value is very low, we will reject the null hypothesis. This data doesn't seem
to follow a normal distribution based on its skewness and kurtosis, which is indicated by
Jarque-Bera test.
Food Industry
Skewness -0.49103
Excel Kurtosis -0.74819
Kurtosis 2.251807

JB 0.571591
Jb 0.571591
CV 1.386294
P 0.751416

33 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Skewness: A negative skewness of -0.491 refers a small leftward skewness (tail to the left) in
the data.
Excel Kurtosis: This is an Excel calculation or representation of kurtosis (-0.748).
Kurtosis: It measures whether a distribution is peaked or flat. If the kurtosis is 2.25, it indicates
that the distribution is more peaked, compared to when it is normal.
As example, p-value is 0.751 and the JB statistic of 0.571 may not be enough to reject null
hypothesis that the provided information is distributed normally because the value of p is
higher than the typical significance values of 0.05. So, taking into account the data's skewness,
kurtosis, and the Jarque-Bera test results, we could erroneously claim that it might follow a
normal distribution based just on this test.

Heteroskedasticity White Test

The White test is a test that is used to detect heteroskedasticity in a regression analysis.
Heteroskedasticity is the situation where the variability errors (or residuals) in a regression
model are not constant. Simply, this means that the residual spread is not consistent with the
predicted values.

Oil Industry
R Square 0.013104907
LM 0.117944164

R Square: It is the R-squared value from a regression model. This is used to measure the
proportion of the variance in a dependent variable which is dependable from the independent
variables. Here, it indicates how well the independent variables explain the variability in the
dependent variable. The value of 0.0131 suggests that independent variables clarify
approximately 1.31% of the variance in dependent variable.
LM: This is the test resulting from the White test for heteroskedasticity. In our case, the test
statistic is 0. 1179.The importance of the LM helps ascertain whether there's evidence to not
accept the null hypothesis of homoskedasticity in favor of the heteroskedasticity alternative
theory.
Without the critical value or further context, it is impossible to definitively determine whether
the test result says that there is heteroskedasticity. The test statistic itself (0.1179) doesn't
provide a direct indication of significance without comparison to a critical value.
Telecommunication Industry
R Square 0.003571

34 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

LM 0.032137
R Square: 0.003570748 is the value in our case. Here, the model explains a very small portion
of the variance in the dependent variable.
LM: 0.032136736 (This might be the test statistic value gained from conducting the White
test.)
Without additional context or the critical value for comparison, it's challenging to interpret the
result. In the White test, if the test statistic exceeds the chi-squared distribution's critical value
with a certain degree of freedom, it shows there is heteroskedasticity.
Here, with the given LM of 0.032136736, it seems small. Normally, a higher test statistic would
suggest the presence of heteroskedasticity, but without the critical value or degrees of freedom,
it's not possible to ascertain the significance of the test result.
The interpretation would largely depend on compare test statistic against the value and the
associated significance level to find out the presence of heteroskedasticity.
Food Industry
R Square 0.170537883
LM 1.534840946

R Square: This value is 0.1705, and represents the coefficient of determination of our model.
R-squared value is 0.1705, which means that approximately 17.05% of the variance in the
dependent variable.
LM: The LM resulting from conducting the White test for heteroskedasticity. In our case, the
LM is 1.5348.
The test statistics follow a chi-square distribution. To ascertain is there any evidence of
heteroskedasticity, this LM needs to be compared against a critical value from the chi-square
distribution. The critical value relies on the significant level selected for the test and the degrees
of freedom.When the LM is greater compared to the critical value, it refers to the evidence of
heteroskedasticity in the regression model. If it's smaller, it suggests that there might not be
significant heteroskedasticity.

Goodness of fit Test

Oil Industry
R Square 0.013104907
In our case, R-squared value is 0.013104907.It is used to measure the goodness of fit of a
regression model.
R-squared is also called coefficient of determination, which determines the percentage of the
dependent variable's volatility that is explained by the independent variable in a regression
model.
35 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

In our case, the value of R-squared is 0.0131, which suggests that only 1.31% variability in the
dependent variable is explained by the independent variable.
A low R-squared value implies that the model does not properly fit with provided data. This
implies that the independent variable does not clarify the variability observed in the dependent
variable.
It's crucial to take into account the context of our analysis when explaining the R-squared value.
Real-world data may have inherent variability which may not be fully outlined by the variables
used in our model.
Telecommunication Industry

R Square 0.003571

In the telecommunication industry, R-squared value is 0.003570748.

Here, an R-squared value of approximately 0.0035 suggests that the dependent variable is
explained by the independent variable only about 0.35%.
A lower R-squared value means the model doesn't effectively elucidate the variations of the
dependent variable. This may imply that the chosen independent variables might not be
strongly related to or predictive of the dependent variable. This low value could also suggest
that there might be other variables or factors that are influencing the dependent variable.
An R-squared of 0.0035 refers that the model might not be a good representation of the
connection between the variables under study.

Food Industry
R Square 0.170538

The result of a Goodness of Fit test, indicated by the value of R-squared which is 0.170537883,
shows the percentage of the dependent variable's volatility that is accounted for by the
independent variable.
The value of R-squared between 0 and 1, there
- 0 means it does not clarify any of the response data's fluctuation around its mean.
- 1 shows that all the response data variability around its mean.
In our case, R-squared value is nearly 0.17 (17%), which implies that the independent variable
in this model can explain about 17% of the variability observed in the dependent variable. It
suggests that while there is a connection between the variables, a significant portion of the
dependent variable remains unexplained in this model.

36 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

It is essential to consider the specific field of study when interpreting the goodness of fit. In
some studies, an R-squared value is 0.17, which may be considered good, while in other
scenarios, that may be considered insufficient for accurate predictions.

Conclusion
The overall purpose of the paper has been to analyze the impact of interest rates on the three
(03) different industries. And the sample contains 15 companies. The model consists of the
intercept and slope. In our model, we have observed that the telecommunication industry has
the highest intercept. Since we have a negative coefficient in the food industry, it tells us that
when the interest rate is zero the food industry has negative growth. And other two industries
have a positive coefficient.
We observed that in the food industry even though the interest rate is zero the investment
growth rate is minus, which means they are having a very bad time maybe because of the
coronavirus pandemic effect. Other than that, the oil & food industry has a positive result even
though the interest rate is zero. Another thing is that the food industry investment may be highly
leveraged. That’s why maybe the coefficient is negative. If we took more companies and more
periods or excluded the pandemic period, we could find a more accurate desired result. We
have conducted several tests which result show similar findings. In our model in Jarque Bera
test the food industry is lower value where the telecommunication industry is highest value,
which refers to the high deviation from the normal distribution. In the white thet the value of
03 industry refers that all have heteroskedasticity.
In navigating the complex interplay of U.S. interest rates and industry-specific investments,
our study provides valuable insights for investors, policymakers, and industry professionals.
As financial landscapes evolve, understanding these dynamics becomes paramount for making
informed decisions and staying resilient in a dynamic economic environment. This study
contributes to the ongoing discourse on the intricate connections between macroeconomic
variables and corporate investment strategies.

37 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

Literature list
Medium
https://medium.com/analytics-vidhya/decoding-simple-linear-regression-
b3f5528e54b7#:~:text=Here%20is%20the%20formula%3A,be%20predicted%20based%20o
n%20Age.
Statistics how to
https://www.statisticshowto.com/jarque-bera-test/
XLSTAT
https://www.xlstat.com/en/solutions/features/heteroscedasticity-tests
Verizon :
https://www.verizon.com/about/investors/annual-report
T-Mobile :
https://investor.t-mobile.com/financials/annual-reports/default.aspx
Comcast Crop:
https://www.cmcsa.com/financials/annual-reports
AT&T :
https://investors.att.com/financial-reports/annual-reports/2022
charter communications :
https://www.annualreports.com/Company/charter-communications-inc
Campbell Soup
https://investor.campbellsoupcompany.com/financials/annual-reports/default.aspx
General Mills
https://investors.generalmills.com/financial-information/annual-reports/default.aspx
Mondelez International
https://www.mondelezinternational.com/investors/financials/annual-reports/
Pepsico
https://www.pepsico.com/investors/financial-information/annual-reports-proxy-information
Conagra
https://www.conagrabrands.com/investor-relations/financial-reports/annual-reports
Chevron

38 | P a g e
Md. Khaleduzzaman Monayam Hossain Moin Serajul Islam
20231164 20231160 20231167

https://www.chevron.com/
Exxon Mobil
https://corporate.exxonmobil.com/
ConocoPhillips
https://www.conocophillips.com/
Marathon Petroleum
https://www.marathonpetroleum.com/
Valero Energy
https://www.valero.com/

39 | P a g e