Essentials Of Business Analytics
1st Edition
ISBN: 9781285187273
Author: Camm, Jeff.
Publisher: Cengage Learning,
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Textbook Question
Chapter 4, Problem 7P
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 web site, April 17, 2012).
- a. Develop a scatter chart for these data with DJIA as the independent variable. What does the scatter chart indicate about the relationship between DJIA and S&P 500?
- b. Develop an estimated regression equation showing how S&P 500 is related to DJIA. What is the estimated regression model?
- c. What is the 95% confidence interval for the regression parameter β1? Based on this interval, what conclusion can you make about the hypotheses that the regression parameter β1 is equal to zero?
- d. What is the 95% confidence interval for the regression parameter β0? Based on this interval, what conclusion can you make about the hypotheses that the regression parameter β0 is equal to zero?
- e. How much of the variation in the sample values of S&P 500 does the model estimated in part (b) explain?
- f. Suppose that the closing price for the DJIA is 13,500. Estimate the closing price for the S&P 500.
- g. Should we be concerned that the DJIA value of 13,500 used to predict the S&P 500 value in part (f) is beyond the
range of the DJIA used to develop the estimated regression equation?
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Chapter 4 Solutions
Essentials Of Business Analytics
Ch. 4 - Bicycling World, a magazine devoted to cycling,...Ch. 4 - In a manufacturing process the assembly line speed...Ch. 4 - Jensen Tire Auto is deciding whether to purchase...Ch. 4 - A sociologist was hired by a large city hospital...Ch. 4 - The regional transit authority for a major...Ch. 4 - A marketing professor at Givens College is...Ch. 4 - The Dow Jones Industrial Average (DJIA) and the...Ch. 4 - The Toyota Camry is one of the best-selling cars...Ch. 4 - Dixie Showtime Movie Theaters, Inc., owns and...Ch. 4 - Prob. 10P
Ch. 4 - The American Association of Individual Investors...Ch. 4 - The National Football League (NFL) records a...Ch. 4 - Johnson Filtration. Inc., provides maintenance...Ch. 4 - A study investigated the relationship between...Ch. 4 - The U.S. Department of Energys Fuel Economy Guide...Ch. 4 - A highway department is studying the relationship...Ch. 4 - A sample containing years to maturity and...Ch. 4 - In 2011, home prices and mortgage rates fell so...Ch. 4 - A recent 10-year study conducted by a research...Ch. 4 - The Scholastic Aptitude Test (or SAT) is a...Ch. 4 - Consider again the example introduced in Section...Ch. 4 - Alumni donations are an important source of...
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