Regression Analysis We estimate a linear regression with Q (Number of “Amazon.co

Question

Regression Analysis We estimate a linear regression with Q (Number of “Amazon.com” shares) as the dependent variable and P (Closing Price in Dollars) as the independent variable (with historical “Amazon.com” stock data).

a. Is your x1 variable statistically significant?

b. In detail, please interpret the 1 coefficient.

We then estimate a log-linear regression with ln(Q) as the dependent variable and ln(P) as the independent variable (with historical “Amazon.com” stock data).

c. Is your x1 variable statistically significant?

d. In detail, please interpret the 1 coefficient.

SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.332230691 0.110377232 0.106623549 5246307.277 239 ANOVA df MS Significance F 1 8.09337E+14 8.09337E+14 29.40505221 1.44537E-07 Regression Residual Total 37 6.52313E+15 2.75237E+13 238 7.33246E+15 P-value Coefficients Standard Error 9988711.926 446539.6966 22.36914658 2.41986E-60 9109018.002 10868405.85 9109018.002 10868405.85 9425.707387 1738.212929 -5.422642549 1.44537E-07 -12850.02859-6001.386182 -12850.02859 -6001.386182 t Stat Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept

Explanation / Answer

a) The p-value of P is less than 0.05, so we reject H0

Thus the variable is statistically significant

b) if the Closing Price increases 1 Dollar then the Number of “Amazon.com” shares decreases 9425

Since The coefficient of Beta 1 = -0.9425 which is negative, so there exist negative correlation between P and Q

c) The p-value of P is less than 0.05, so we reject H0

Thus the variable is statistically significant

d)

if the Closing Price increases 1 Dollar then the Number of “Amazon.com” shares decreases exp(-0.21093) shares

Since The coefficient of Beta 1 = -0.21093 which is negative, so there exist negative correlation between P and Q

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