Investment analysts generally believe that the interest rate on bonds is inversely related to the prime interest rate for loans. Use the following data to construct the least-squares regression line to predict bond rates by the prime interest rate: Bond Rate (%) Prime Interest Rate (%) 15 16 12 8 15 4 7 17 ( a ) Compute ΣΧ, ΣΧ, ΣΥ, ΣΥ2 and ΣΧΥ. (b) Find and interpret the slope of the estimated regression line (c) Find and interpret the intercept of the estimated regression line.

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Investment analysts generally believe that the interest rate on bonds is inversely related to the prime interest rate for loans. Use the
following data to construct the least-squares regression line to predict bond rates by the prime interest rate:
Bond Rate (%)
Prime Interest Rate
(%)
5
16
12
6
15
7
17
( a) Compute ΣΧ, ΣΧ2, ΣΥ, ΣΥ2 and ΣΧΥ
(b) Find and interpret the slope of the estimated regression line
(C) Find and interpret the intercept of the estimated regression line.
(d) Write down the equation for the estimated regression line.
(e) Calculate the standard error of the estimate.
(f) Find and interpret a 90% confidence interval for the prime interest rate.
(g) Test the claim that one-point increase in the prime rate will decrease the interest rates on bonds by less than 1%. (Use a = 1%)
Transcribed Image Text:Investment analysts generally believe that the interest rate on bonds is inversely related to the prime interest rate for loans. Use the following data to construct the least-squares regression line to predict bond rates by the prime interest rate: Bond Rate (%) Prime Interest Rate (%) 5 16 12 6 15 7 17 ( a) Compute ΣΧ, ΣΧ2, ΣΥ, ΣΥ2 and ΣΧΥ (b) Find and interpret the slope of the estimated regression line (C) Find and interpret the intercept of the estimated regression line. (d) Write down the equation for the estimated regression line. (e) Calculate the standard error of the estimate. (f) Find and interpret a 90% confidence interval for the prime interest rate. (g) Test the claim that one-point increase in the prime rate will decrease the interest rates on bonds by less than 1%. (Use a = 1%)
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