Consider the following model of stock prices: Price=Bo + Biearning + ɛ. Where earning is the annual profit per share. Price 65 18 45 32 37 52 24 27 19 31 Earning 2.35 0.15 1.15 1.1 1.5 1.6 1 0.55 0.2 0.4 a. Use the method of OLS to estimate the unknown parameters, ßo and B1. Write the regression equation. b. Calculate SSE, s², s, and and S, - c. Test for significance of ßi using a=0.05. Interpret the results. d. Construct a 95% confidence interval for ß1. Interpret the interval. e. Calculate R? and r. Interpret them and test for significance of correlation coefficient using a=0.05
Permutations and Combinations
If there are 5 dishes, they can be relished in any order at a time. In permutation, it should be in a particular order. In combination, the order does not matter. Take 3 letters a, b, and c. The possible ways of pairing any two letters are ab, bc, ac, ba, cb and ca. It is in a particular order. So, this can be called the permutation of a, b, and c. But if the order does not matter then ab is the same as ba. Similarly, bc is the same as cb and ac is the same as ca. Here the list has ab, bc, and ac alone. This can be called the combination of a, b, and c.
Counting Theory
The fundamental counting principle is a rule that is used to count the total number of possible outcomes in a given situation.
only need part D, E, F, and G answered.
![Consider the following model of stock prices: Price=ßo + Biearning + ɛ. Where earning is the
annual profit per share.
Price
65
18
45
32
37
52
24
27
19
31
Earning
2.35 0.15 1.15 1.1
1.5
1.6
1
0.55
0.2
0.4
a. Use the method of OLS to estimate the unknown parameters, ßo and B1. Write the
regression equation.
b. Calculate SSE, s², s, and and S3, -
c. Test for significance of Bi using a=0.05. Interpret the results.
d. Construct a 95% confidence interval for B1. Interpret the interval.
e. Calculate R? and r. Interpret them and test for significance of correlation coefficient using
a=0.05
f. Predict average price of stocks when earning is $2. Construct a 90% confidence interval
(prediction interval) for the average price.
g. Make a prediction of price of a stock when earning is $2. Construct and interpret a 90%
prediction interval](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F355bf11b-5c0a-464e-b00b-bafb8db11337%2F6cdacef5-f81b-4ff6-bb39-9e23907f153f%2Fsf4xal_processed.png&w=3840&q=75)
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