Question

MGT 2120 – STATS II

(Chapters 15) –-

MUST SHOW ALL CALCULATIONS

        1.     The prices of Rawlston, Inc. stock (y) over a period of 12 days, the number of shares (in 100s) of company's stocks sold (x₁), and the volume of exchange (in millions) on the New York Stock Exchange (x₂) are shown below.

Day	(y)	(x1)	(x2)
1	87.50	950	11.00
2	86.00	945	11.25
3	84.00	940	11.75
4	83.00	930	11.75
5	84.50	935	12.00
6	84.00	935	13.00
7	82.00	932	13.25
8	80.00	938	14.50
9	78.50	925	15.00
10	79.00	900	16.50
11	77.00	875	17.00
12	77.50	870	17.50

A . Develop an estimated regression equation with BOTH the number of stock sold (X1) and The Volume Exchange (X2). Do this using excel computer method. Clip and tape result to this section. (3 Points)

	B. Use the output shown above and write an equation that can be used to predict the price of the stock. (3 points)
	C. Interpret the coefficients of the estimated regression equation that you found in Part B. (3 Points)
	D. At 95% confidence, determine which variables are significant and which are not. (3 Points)
	E. If in a given day, the number of shares of the company that were sold was 94,500 and the volume of exchange on the New York Stock Exchange was 16 million, what would you expect the price of the stock to be? (3 Points)

Answer 1

1.Bring data table in to excel sheet

2. Go to DAta--> Data Analysis -- > and choose REgression analysis

3. Choose Y variable and X1,X2 variables and choose the outputrange in excel

A . Develop an estimated regression equation with BOTH the number of stock sold (X1) and The Volume Exchange (X2). Do this using excel computer method. Clip and tape result to this section. (3 Points)

4. Populate the output in excel like below

6. with this output we can simply answer the aove question

b.Use the output shown above and write an equation that can be used to predict the price of thestock.

= 118.5055 - 0.0163x1- 1.5726x2

c.Interpret the coefficients of the estimated regression equation that you found in Part b

As the number of shares of the stock sold goes up by 1 unit, the stock price goes down by $0.0163 (holding the volume of exchange on the New York Stock Exchange constant).As the volume of exchangeon the New York Stock Exchange goes up by 1 unit, the stock price goes down by $1.5726 (holding the number ofshares of the stock sold constant)

d.At 95% confidence, determine which variables are significant and which are not.

x1 is not significant; the p-value = 0.6176 > $\alpha$ = 0.05

x2 is significant; the p-value = 0.0018 <   $\alpha$ = 0.05

E. If in a given day, the number of shares of the company that were sold was 94,500 and the volume of exchange on the New York Stock Exchange was 16 million, what would you expect the price of the stock to be? (3 Points)

Ans: x1=945 and x2=16 into the equation y= stock price= 77.94, the prediction should be accurate because all the variables(x1=945 and x2=16 ) are in the range of the variables used in the regression model and we have a high r^2.