Many variables influence the price of a company's common stock, including company-specific internal variables such as product quality and financial performance, and external market variables such as interest rates, exchange rates and stock market performance. The attached table contains quarterly data on three such external variables (x1, x2, and x3) and the price y of Ford Motor Company's common stock (adjusted for stock splits). The Japanese yen exchange rate, x1, measures the strength of the yen versus the US dollar. The higher the rate, the cheaper are Japanese imports – such as the automobiles of Toyota, Nissan, Honda, and Subaru – to US consumers. Similarly, the higher the deutsche mark exchange rate, x2, the less expensive are BMW's and Mercedes Benz's to US consumers. Finally, the S&P 500 Index, x3, is a general measure of the performance of the market for stocks in US firms. Answer the questions below using the critical value approach and/or the p-value approach 1) Fit the regression model y = B, + B,x, + ß,x, + B,x, +ɛ to the data. Report the LS (least squares) equation and all the relevantt-statistics.
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
|
Date |
Ford stock Price y |
Japanese Yen x1 |
Deutsche Mark x2 |
S&P500 x3 |
|
1992.1 |
38.3 |
133.2 |
1.64 |
407.36 |
|
1992.2 |
45.2 |
125.5 |
1.53 |
408.21 |
|
1992.3 |
39.4 |
119.2 |
1.41 |
418.48 |
|
1992.4 |
42.7 |
124.7 |
1.61 |
435.64 |
|
1993.1 |
52.3 |
121.3 |
1.61 |
450.16 |
|
1993.2 |
55.3 |
110.1 |
1.69 |
447.29 |
|
1993.3 |
64.7 |
105.2 |
1.62 |
459.24 |
|
1993.4 |
58.1 |
111.3 |
1.73 |
465.34 |
|
1994.1 |
59.9 |
103.4 |
1.76 |
463.21 |
|
1994.2 |
27.6 |
99.5 |
1.6 |
454.83 |
|
1994.3 |
27.5 |
98.5 |
1.55 |
466.96 |
|
1994.4 |
26.3 |
99.6 |
1.38 |
455.19 |
|
1995.1 |
29.5 |
89.4 |
1.39 |
493.15 |
|
1995.2 |
31.2 |
84.6 |
1.42 |
539.23 |
|
1995.3 |
28.7 |
98.2 |
1.43 |
578.32 |
|
1995.4 |
28.9 |
102.4 |
1.48 |
614.57 |
|
1996.1 |
34.8 |
106.3 |
1.52 |
647.05 |
|
1996.2 |
36.2 |
109.8 |
1.58 |
668.53 |
|
1996.3 |
32.1 |
110.5 |
1.61 |
672.92 |
|
1996.4 |
33.9 |
112.8 |
1.69 |
689.35 |
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