The Dow Jones Industrial Average (DJIA) and the Standard & Poor’s 500 (S&P 500) indexes are used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the S&P 500 for 15 weeks, beginning with January 6, 2012, follow (Barron’s website, April 17, 2012). must be solved on excel Date DJIA S&P January 6 12360 1278 January 13 12422 1289 January 20 12720 1315 January 27 12660 1316 February 3 12862 1345 February 10 12801 1343 February 17 12950 1362 February 24 12983 1366 March 2 12978 1370 March 9 12922 1371 March 16 13233 1404 March 23 13081 1397 March 30 13212 1408 April 5 13060 1398 April 13 12850 1370 d. Did the estimated regression equation provide a good fit? Explain. e. Suppose that the closing price for the DJIA is 13,500. Predict the closing price for the S&P 500. f. Should we be concerned that the DJIA value of 13,500 used to predict the S&P 500 value in part(e) is beyond the range of the data used to develop the estimated regression equation?
2. The Dow Jones Industrial Average (DJIA) and the Standard & Poor’s 500 (S&P 500) indexes are used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing price for the DJIA and the S&P 500 for 15 weeks, beginning with January 6, 2012, follow (Barron’s website, April 17, 2012).
must be solved on excel
|
Date |
DJIA |
S&P |
|
January 6 |
12360 |
1278 |
|
January 13 |
12422 |
1289 |
|
January 20 |
12720 |
1315 |
|
January 27 |
12660 |
1316 |
|
February 3 |
12862 |
1345 |
|
February 10 |
12801 |
1343 |
|
February 17 |
12950 |
1362 |
|
February 24 |
12983 |
1366 |
|
March 2 |
12978 |
1370 |
|
March 9 |
12922 |
1371 |
|
March 16 |
13233 |
1404 |
|
March 23 |
13081 |
1397 |
|
March 30 |
13212 |
1408 |
|
April 5 |
13060 |
1398 |
|
April 13 |
12850 |
1370 |
d. Did the estimated regression equation provide a good fit? Explain.
e. Suppose that the closing price for the DJIA is 13,500. Predict the closing price for the S&P 500.
f. Should we be concerned that the DJIA value of 13,500 used to predict the S&P 500 value in part(e) is beyond the
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