Suppose that as an investor in the stock market, you’re looking for a stock that's going to move in tandem with the overall market. You compute the returns for a stock you're looking at, and run a regression against a broad market index, obtaining the following regression output:

Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter1: Functions
Section1.EA: Extended Application Using Extrapolation To Predict Life Expectancy
Problem 6EA
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Suppose that as an investor in the stock market, you're looking for a stock that's going to
move in tandem with the overall market. You compute the returns for a stock you're
looking at, and run a regression against a broad market index, obtaining the following
regression output:
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
0.998
0.996
0.996
0.190
Observations
10
ANOVA
df
SS
MS
F
Significance F
Regression
1
80.541
Residual
8
0.289
Total
80.828
Coefficients Standard Error t Stat
P-value
Lower 95% Upper 95%
Intercept
0.131
0.130
.014 0.340341
0.030
0.167
Broad Market Index
0.988
0.021
47.218 4.39E-11
0.940
1.036
What is the test statistic corresponding to the claim that there is a significant correlation?
enter 3 decimal places
What is the test statistic for the overall validity of the model?
enter 3 decimal places
What is the best estimate for the pooled variance?
enter 3 decimal places
Transcribed Image Text:Suppose that as an investor in the stock market, you're looking for a stock that's going to move in tandem with the overall market. You compute the returns for a stock you're looking at, and run a regression against a broad market index, obtaining the following regression output: SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error 0.998 0.996 0.996 0.190 Observations 10 ANOVA df SS MS F Significance F Regression 1 80.541 Residual 8 0.289 Total 80.828 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 0.131 0.130 .014 0.340341 0.030 0.167 Broad Market Index 0.988 0.021 47.218 4.39E-11 0.940 1.036 What is the test statistic corresponding to the claim that there is a significant correlation? enter 3 decimal places What is the test statistic for the overall validity of the model? enter 3 decimal places What is the best estimate for the pooled variance? enter 3 decimal places
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