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You believe that the price of Zoom Videoconferencing stock and the price of American Airlines stock will move in opposite directions. In order to test this relationship, we do a simple regression with the following variables:

You believe that the price of Zoom Videoconferencing stock and the price of American Airlines stock will move in opposite directions. In order to test this relationship, we do a simple regression with the following variables:

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 15PPS
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  1. You believe that the price of Zoom Videoconferencing stock and the price of American Airlines stock will move in opposite directions. In order to test this relationship, we do a simple regression with the following variables:

    A - dependent variable : month end price of American Airlines stock
    Z - independent variable: month end price of Zoom Videoconferencing stock
    Data from April 2019 through December 2020 (21 observations) is available

    Based on the data, we compute the following:
    Var (Z) = 20927.702
    Cov (A,Z) = -899.153
    E(A) = 20.790
    E(Z) = 187.530
    Std Error of Estimate = 6.088
    TSS = 1476.830

    1. Consider the equation At = b0 + b1 Zt + εt
      Based on the numbers given above, complete the following table

Variable

Estimate

Std error

t-statistic

Slope b1

 

.00941   

 

Constant b0

 

2.2088   

 

R-square

 

N/A

N/A

F statistic

 

N/A

N/A

 

Are the coefficients (slope and/or constant) significant at the .05 level?

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