Consumer Price Inder (CPI), Gold Price. and NYSE Indez. 1974-2006 HTSE 153.26 46
ID: 3317137 • Letter: C
Question
Consumer Price Inder (CPI), Gold Price. and NYSE Indez. 1974-2006 HTSE 153.26 463.54 483.55 1977 65.20 616.68 720.15 612.56 460.03 82.40 728.84 424.35 360.48 93.60 977.33 1142.3 1438.02 1703.73 1585.14 446.46 436.34 381.44 383.51 362.11 343.82 353.77 1383 1333.47 2181.72 2421.51 2638.36 130.70 1994 148.20 384.17 4827.35 294.24 1333 6546.81 6805.83 6397.85 278.88 172.20 303.73 363.38 403.72 444.74 603.46 7343.00 8357.33 2006 1. This table presents annual data of the price of the ounce of gold, the Consumer Price Index (CPI) and the New York Stock Exchange Index (NYSE) from 1974 to 2006 A hypothesis arises that argues that an investment is a protection against inflation provided that the price of the investment or the rate of return is maintained at least at the same rate as the inflation rate. To test this hypothesis, it will carry out a regressionExplanation / Answer
1A
Looking at the data, we can say that there is a strong linear relationship (positive correlation) between the two variables in each of the models. This means that one variable (independent) affects the another variable (dependent)
1B
Gold: -
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.419329731
R Square
0.175837423
Adjusted R Square
0.149251534
Standard Error
103.0725819
Observations
33
ANOVA
df
SS
MS
F
Significance F
Regression
1
70266.19299
70266.19299
6.613937921
0.015135158
Residual
31
329342.6713
10623.95714
Total
32
399608.8643
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Intercept
215.2856005
54.46850227
3.952478801
0.000416818
104.1963578
326.3748433
CPI
1.038430012
0.403782204
2.571757749
0.015135158
0.214910778
1.861949246
NYSE: -
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.915924146
R Square
0.838917041
Adjusted R Square
0.833720817
Standard Error
1010.482667
Observations
33
ANOVA
df
SS
MS
F
Significance F
Regression
1
164849961.2
164849961.2
161.4474213
7.90084E-14
Residual
31
31653331.82
1021075.22
Total
32
196503293
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Intercept
-3445.122044
533.9875689
-6.451689598
3.41688E-07
-4534.196871
-2356.047217
CPI
50.29773678
3.958520401
12.70619618
7.90084E-14
42.22428119
58.37119236
1c
Gold Price: -
Slope is 1.038 which means for every increase of 1 in IPC, gold price would go up by 1.038
NYSE: -
Slope is 50.3 which means for every increase of 1 in IPC, gold price would go up by 50.3
1d
Gold Price: -
r^2=0.1758 which means 17.58% of the variation in dependent variable is accounted for by the independent variable
NYSE: -
r^2=0.8389 which means 83.89% of the variation in dependent variable is accounted for by the independent variable
1e
r^2 for NYSE is more and hence model of NYSE reflects greater impact on inflation
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.419329731
R Square
0.175837423
Adjusted R Square
0.149251534
Standard Error
103.0725819
Observations
33
ANOVA
df
SS
MS
F
Significance F
Regression
1
70266.19299
70266.19299
6.613937921
0.015135158
Residual
31
329342.6713
10623.95714
Total
32
399608.8643
Coefficients
Standard Error
t Stat
P-value
Lower 95%
Upper 95%
Intercept
215.2856005
54.46850227
3.952478801
0.000416818
104.1963578
326.3748433
CPI
1.038430012
0.403782204
2.571757749
0.015135158
0.214910778
1.861949246
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