Financial Analysis 2 The Chief Financial Analyst of United Technologies, Inc. has developed a regression model relating annual GDP growth to company sales growth. The diagnostic plot below was obtained. Use this information to answer the following questions Normal Distribution Scores Normal Probablity Plot

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Financial Analysis 2: The Chief Financial Analyst of United Technologies, Inc. has developed a regression model relating annual GDP growth to company sales growth. The diagnostic plot
below was obtained. Use this information to answer the following questions
Normal Distribution Scores
17
2
oo
Normal Probablity Plot
-1
0
Standardized Residuals
Transcribed Image Text:Financial Analysis 2: The Chief Financial Analyst of United Technologies, Inc. has developed a regression model relating annual GDP growth to company sales growth. The diagnostic plot below was obtained. Use this information to answer the following questions Normal Distribution Scores 17 2 oo Normal Probablity Plot -1 0 Standardized Residuals
(a) What is being informally tested here? (Choose one)
Whether all of the x variables are important in predicting y.
The assumption of constant variance.
O Whether there is a linear relationship between x and y.
The assumption of linearity.
The assumption of independence.
O The assumption of normally-distributed disturbances.
(b) Which hypotheses are informally being tested? (Choose one)
O Ho: All of the x variables in the model are not important
Ha: Atleast one of the x variables is important
O Ho: B₁ = 0
Ha: B₁# 0
O Ho: Disturbances are normal
Ha: Disturbances are non-normal
O Ho: The model variance is constant
Ha: The model variance is not constant
Ho: P1 = 1.0
Ha: 1 # 1.0
(c) What is your conclusion? (Choose one)
O The assumption of constant variance has been met.
The assumption of independence has not been met.
The assumption of constant variance has not been met.
O There is not a linear relationship between x and y.
O The assumption of normally-distributed disturbances has not been met.
O The assumption of normally-distributed
disturbances has been met.
en met.
The assumption of independence has
O There is a linear relationship between x and y.
Transcribed Image Text:(a) What is being informally tested here? (Choose one) Whether all of the x variables are important in predicting y. The assumption of constant variance. O Whether there is a linear relationship between x and y. The assumption of linearity. The assumption of independence. O The assumption of normally-distributed disturbances. (b) Which hypotheses are informally being tested? (Choose one) O Ho: All of the x variables in the model are not important Ha: Atleast one of the x variables is important O Ho: B₁ = 0 Ha: B₁# 0 O Ho: Disturbances are normal Ha: Disturbances are non-normal O Ho: The model variance is constant Ha: The model variance is not constant Ho: P1 = 1.0 Ha: 1 # 1.0 (c) What is your conclusion? (Choose one) O The assumption of constant variance has been met. The assumption of independence has not been met. The assumption of constant variance has not been met. O There is not a linear relationship between x and y. O The assumption of normally-distributed disturbances has not been met. O The assumption of normally-distributed disturbances has been met. en met. The assumption of independence has O There is a linear relationship between x and y.
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