SRR=b0 +b1MRR +e with SRR :stock rate of return andMRR market rate of return STO
ID: 2914470 • Letter: S
Question
SRR=b0 +b1MRR +e with SRR :stock rate of return andMRR market rate of return
STOCK RATE OF RETURN :SRR Y
MARKET RATE OF RETURN :MRR X
2.0
-10.0
18.0
9.0
12.0
-1.0
-12.0
2.0
1.0
-5.0
12.0
5.0
7.0
0.0
-6.0
2.0
a) Calculate b0 andb1
b) Interpret the estimatedregression line and the Coefficient of Determination
c) Test the nullhypothesis H0:B1=0 versus H1 :B1¹0 AT 5% level ofsignificance.
d) A investor is willingto invest in that stock only if the beta is 1.5
How would you do and whatwould you advise him or her?
Should the investor buy ornot
STOCK RATE OF RETURN :SRR Y
MARKET RATE OF RETURN :MRR X
2.0
-10.0
18.0
9.0
12.0
-1.0
-12.0
2.0
1.0
-5.0
12.0
5.0
7.0
0.0
-6.0
2.0
Explanation / Answer
Regression Analysis: Yversus X
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