19. Regression model is a statistical framework used to develop a mathematical e

Question

19. Regression model is a statistical framework used to develop a mathematical equation that describes how (a) one explanatory variable is related to one or more than one response variables (b) one or more than one response variables are related to a one or more than one explanatory variables (c) one response variable is related to one or more than one explanatory variables (d) all of the above statements are correct 20. Regression analysis was employed to test whether the return on CAT's stock is determined by the return on the S&P; 500 market index. Using ordinary least squares method and monthly data over the period 1993:12-1999:04, the following equation was estimated: rCAT = 0.0015 + 1.1 43rs&P500; Based on the estimated CAPM equation, if the return on the market were to increase by 10% the rate of return on CAT's stock would (a) increase by 0.1 5% (b) increase by 11.43% (c) decrease by 11.43% (d) decrease by 0.15% Regressing child mortality (CM) on per capita GNP (PGNP) and the female literacy rate (FLR) for a sample of 64 countries, regression results obtained are reported below with some additional information:

Explanation / Answer

19 Option C

The formulation of a regression model is –

Y = Bo + B1*X1 + B2*X2 + ..+e

So it shows how one response variable is related to one or more than one explanatory variable.

29 option B
If drCAT/drS&P = 1.143 and if drS&P = 10%

Then drCAT = 1.143* drS&P
drCAT = 1.1143* 10%
= 11.43%

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