a) Write out this regression equation. b) Test for the statistical significance of each explanatory variable in the model at the 5% level of significance and comment on the effect each variable has on the MEDDI stock returns. Show all workings.
You are interested in investigating the factors that influence the returns of the mining company Meddi Ltd. You have reason to believe that the company EPS, the rate of inflation and interest rates have an impact on the performance if this company, and to test this claim, you run a regression. The regression results are displayed below.
Dependent Variable: LMEDDI
Method: Least Squares
Date: 18/04/22 Time: 14:26
Sample (adjusted): 1995M08 2021M12
Included observations: 124 after adjustments
Each variable has been transformed into log form so they can be interpreted as percentages where:
LMEDDI = natural log of Meddi Ltd returns
LCPI = natural log of the inflation rates
LINT = natural log of the interest rates
a) Write out this regression equation.
b) Test for the statistical significance of each explanatory variable in the model at the 5%
level of significance and comment on the effect each variable has on the MEDDI stock
returns. Show all workings.
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