1A. We run a linear regression and find a fitted line. We back this up with an h

Question

1A.

We run a linear regression and find a fitted line. We back this up with an hypothesis test on the slope (H0 : 1 = 0). This null hypothesis says that as the X variable goes up

A. Y stays the same?

B. Y goes up

C. Y goes down

D. Y = 0

1B.

The Y-intercept (b0) represents the

A. predicted value of Y when X = 0.

B. change in estimated average Y per unit change in X.

C. predicted value of Y.

D. variation around the sample regression line.

1C.

If the correlation between oil prices and interest rates is 0.80, then for this model, what % of the change in interest rates is explained by oil prices?

A. 8%

B. 80%

C. 64%

D. Non of the above

Explanation / Answer

1. Null hypothesis is a condition of equality and it would mean that as X goes up, Y stays the same, so A

2. The intercept BETA means A) predicted value of Y when X is 0

3. R sqaure is the change in interest rates is explained by oil prices. Thus answer is C) 64% which is sqaure of 8%

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