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Minghui Yang

From: Francisco Almonte

December 19, 2010

Q1: Data: EXCEL ﬁles Chp2 IBD.xls Questions:

1. How many variables are in this data set and their type (nominal, ordinal, interval, ratio)?

Answer:

There are six variables in the data set. Here are their names and types:

Variable Name Variable Type

Company Nominal

EPS Rating Ordinal

Relative Price Strength Ordinal

Relative Strength Ordinal

Sales/Margins/ROE Ordinal

PE Ratio Ratio

2. Draw frequency distribution for Sales/Margins/ROE

A B C D E

Frequency Distribution of

Sales/Margins/ROE

Sales/Margins/ROE

F

r

e

q

u

e

n

c

y

0

2

4

6

8

1

0

1

2

Figure 1: Histogram displaying the distribution for Sales/Margins/ROE.

1

3. Generate descriptive statistics for EPS rating and explain them (mean, variance, medium, mode,

range, mode, skewness, kurtosis etc)

Answer:

I generated the following EPS rating descriptive statistics using the “R” statistics package:

EPS Rating Descriptive Statistics

Statistic Name Value Meaning

mean 62.028 The sum of a list of numbers, divided by the total number

of numbers in the list.

variance 688.142 Measure of the average distance between each of a set of

data points and their mean value; equal to the sum of the

squares of the deviation from the mean value.

median 71 “Middle value” of a list. The smallest number such that at

least half the numbers in the list are no greater than it.

mode(s) 58,76,80,84 For lists, the mode is the most common (frequent) value.

A list can have more than one mode. A data set has no

mode when all the numbers appear in the data with the

same frequency.

range 92 The range of a set of numbers is the largest value in the

set minus the smallest value in the set.

skewness -0.738 Skewness is a measure of symmetry, or more precisely, the

lack of symmetry. A distribution, or data set, is symmet-

ric if it looks the same to the left and right of the center

point. Negative values for the skewness indicate data that

are skewed left and positive values for the skewness indi-

cate data that are skewed right. In this case the data are

skewed left.

kurtosis 2.299 The kurtosis is a measure of the peakedness of the data

distribution. Negative kurtosis would indicates a ﬂat dis-

tribution, which is said to be platykurtic. Positive kurtosis

would indicates a peaked distribution, which is said to be

leptokurtic. In this case, it is leptokurtic.

4. Use regression analysis to determine if EPS Rating is related to Relative Price Strength

Answer:

See Figure #2 for a plot of “EPS Rating Vs. Relative Price”. “EPS Rating” is the in-

dependent variable, whereas “Relative Price” is the dependent variable. I ﬁtted a linear

regression line through the plots. From visually inspecting the line ﬁt, it appears that

there is no correlation between the variables. I base this assessment on the observation

that plot points do not cluster around the line.

I conﬁrmed this assessment by interpreting the correlation coeﬃcient (using Spear-

man’s method)

a

. Its value is: 0.094. Assuming |0.6| or higher for this number means the

variables are related, we can conclude that they are not related.

a

Spearman’s correlation coeﬃcient is preferred over Pearson’s when the variables being tested are

ordinal. Pearson’s coeﬃcient number would’ve been: 0.18

2

20 40 60 80 100

1

0

2

0

3

0

4

0

5

0

6

0

7

0

EPS Rating

Vs.

Relative Price

EPS Rating

R

e

l

a

t

i

v

e

P

r

i

c

e

Figure 2: Regression Analysis for EPS Rating Vs. Relative Price

3

Q2: 20% of applicants for a VISA card are rejected. Write down the probability distribution formula. What

is its expected rejection number and variance (formula and your calculation)?

Answer:

The general probability distribution function for this binomial distribution is:

P(X = x) =

n

C

x

p

x

q

n−x

=

n

C

x

0.2

x

0.8

n−x

Now let’s customize this function even further for this problem:

P(X = x) =

15

C

x

0.2

x

0.8

15−x

Also, as I’ve done on previous homework, I will use existing technology to generate a

distribution table I can use to answer any questions:

x P(X = x)

a

x P(X = x)

0 0.0352 8 0.0035

1 0.1319 9 7e-04

2 0.2309 10 1e-04

3 0.2501 11 0

4 0.1876 12 0

5 0.1032 13 0

6 0.043 14 0

7 0.0138 15 0

a

Note: I rounded down to four digits.

What is the probability that among the next 15 applicants:

a) None will be rejected

Answer:

From the table I constructed, P(X = 0) = 0.0352

b) All will be rejected

Answer:

From the table I constructed, P(X = 15) = 0

The above result means that there is virtually no chance of this happening.

c) Less than 4 will be rejected

Answer:

From the table I constructed:

P(X < 4) = P(X = 0) +P(X = 1) +P(X = 2) +P(X = 3)

= 0.0352 + 0.1319 + 0.2309 + 0.2501

= 0.6481

d) More then 6 will be rejected

Answer:

From the table I constructed and re-using the previous results:

P(X > 6) = 1 −[P(X < 4) +P(X = 4) +P(X = 5) +P(X = 6)]

= 1 −(0.6481 + 0.1876 + 0.1032 + 0.043)

= 0.0181

4

Q3: Data: EXCEL ﬁles Chp7 MetAreas.xls. 100 random samples were selected from US and Canada cities

with Overall Rating for each city.

1. What is the sample mean and variance?

Answer:

The sample mean is: 67.599; and the sample variance is: 16.499.

2. What is the variance of the mean? What is its distribution?

Answer:

The variance of the mean is computed as follows:

σ

2

¯ x

=

σ

2

x

n

=

16.499

100

= 0.165

Since the population standard deviation is unknown, the mean has a Student’s t distribu-

tion.

3. What is the expected Population mean for Rating?

Answer:

The expected population mean for the Rating is:

µ

¯ x

±σ

¯ x

= 67.599 ±0.406

4. What is the 95% conﬁdence interval of the population mean?

Answer:

Since the Student’s t table does not show values for degree of freedom (df) equal to 99 (it

jumps from 60 to 120), I’ll have to use the normal (Z) distribution table for this portion of

the problem.

Looking up Z

95%

in the distribution table, we get: Z

95%

= 1.96

Now, we calculate the lower and upper limits:

Lower limit = µ

¯ x

−σ

¯ x

Z

95%

= 67.599 −0.406 ×1.96 = 66.803

Upper limit = µ

¯ x

+σ

¯ x

Z

95%

= 67.599 + 0.406 ×1.96 = 68.395

So the 95% conﬁdence interval is: 66.803 ≥ µ

¯ x

≤ 68.395

5. If we want the error to be 1% (plus, minus 1%, total 2%), what should the sample size be?

Answer:

Assuming that the desired conﬁdence interval is still 95%, we use the formula:

n =

σ

¯ x

Z

95%

0.02

2

=

0.406 ×1.96

0.02

2

= 1583

5

6. If one states “the average Rating score for US and Canada cities is at least 70”, develop your null

and alternative test at 1% and 5% level to see if the statement is true?

Answer:

Again, because the book’s Student’s t table does not have values for df = 99, we will have

to calculate the z-score and use the normal probability table.

First, let’s establish the hypotheses:

H

0

: µ ≥ 70 ⇒H

a

: µ < 70

Now lets’s calculate the z-score:

z

calc

=

67.599 −70

4.062

√

100

= −5.9138

Now let’s lookup the left-tailed z-scores for each conﬁdence level:

z

0.01

≈ −0.025 and z

0.05

≈ −0.125

Since z

calc

is oﬀ the chart to the far left: At both the 1% and 5% signiﬁcance levels, we

can reject the null hypothesis and conclude that: “the average Rating score for US and

Canada cities is less than 70”.

6

Q4: Data: EXCEL ﬁles Chp10 CheckAcct.xls. Some samples from two branches of BECU were selected

about the check balance.

1. What is the sample mean and variance for each branch? What is the diﬀerence between the two

sample mean?

Answer:

Here is the sample mean and variance for each branch (the df is also included):

Sample Mean Sample Variance df

Cherry Grove 1025 22500.296 27

Beechmont 910.045 15624.141 21

A conﬁdence level was not stated, so I will assume 95% (α = 0.05). So for the dif-

ference, we use the following formula:

¯ x

1

− ¯ x

2

±t

α/2

s

2

1

n

1

+

s

2

2

n

2

To ﬁnd t

α/2

we must compute the combined df:

df =

s

2

1

n1

+

s

2

2

n2

2

1

n1−1

s

2

1

n1

2

+

1

n2−1

s

2

2

n2

2

=

22500.296

28

+

15624.141

22

2

1

28−1

22500.296

28

2

+

1

22−1

15624.141

22

2

= 47.81 ≈ 48

The book’s t table jumps from df = 40 to df = 60. Instead of using the book’s t

table, I found one online

a

that included two-tail values for df = 48. This yielded that

t

n−1,α/2

= t

48,0.025

= 2.011

Now we go back to the ﬁrst formula and plug in values:

1025 −910.045 ±2.011

22500.296

28

+

15624.141

22

114.955 ±78.242

The above means that there is a 95% certainty that the diﬀerence between the population

means is between: 36.713

b

and 193.197

c

.

a

This online table is located at: http://www.medcalc.org/manual/t-distribution.php

b

114.955 - 78.242 = 36.713

c

114.955 + 78.242 = 193.197

7

2. Use F test to see if their variance is the same?

Answer:

Again, a conﬁdence level was not stated, so I will assume 95% (α = 0.05).

First, let’s state the hypotheses:

H

0

: σ

1

= σ

2

⇒H

a

: σ

1

= σ

2

Second, calculate the F-value:

F

calc

=

s

2

1

s

2

2

=

22500.296

15624.141

= 1.44

Since most f test tables do not have df = 27 for v

1

, we will use f

0.05

(30, 21). Note that

since this is a two-tailed test, our conﬁdence level will be reduced to 90%.

Third, lookup F

30,21

in the table:

F

30,21

= 2.0102

Lastly, we compare F-values and come to a conclusion:

Since (F

calc

< F

30,21

), we fail to reject the null hypothesis and conclude that: “both

standard deviations are equal (σ

1

= σ

2

)”.

8

3. If one states “the diﬀerence of checking balance between the 2 branches is at least $200”, do you

use t-test or z-test for your test? Why? Is it one-tail or two-tails test? Develop your test at 1%

and 5% level and show your result.

Answer:

First oﬀ, we will need to use a t-test because the population standard deviations are

unknown. It is a two-tail test where the critical regions fall on the left and right tails;

this is because we are interested in wether the diﬀerence from one account to the other is

±$200.

Here are the hypotheses:

H

0

: µ

1

−µ

2

−200 = 0 ⇒H

a

: µ

1

−µ

2

−200 = 0

Now let’s calculate the t-value:

t

calc

=

(¯ x

1

− ¯ x

2

) −200

s

2

1

n1

+

s

2

2

n2

=

(1025 −910.045) −200

22500.296

28

+

15624.141

22

= −2.186

We’re also going to need the combined df which we already calculated for the ﬁrst prob-

lem. It is ≈ 48.

The book’s t table jumps from df = 40 to df = 60. Instead of using the book’s t

table, I found one online

a

that included two-tail values for df = 48.

Comparing the left tail according to the online table, and since α/2 = 0.005 at 1%:

t

calc

= −2.186 > t

48,0.005

= −3.505

According to this comparison, at a 1% level, we reject the null and conclude that: “the

diﬀerence of checking balance between the 2 branches is less than $200”.

Now, comparing the left tail according to the online table, and since α/2 = 0.025 at

5%:

t

calc

= −2.186 < t

48,0.025

= −2.011

According to this comparison, at a 5% level, we just barely fail to reject the null and con-

clude that, indeed: “the diﬀerence of checking balance between the 2 branches is at least

$200”.

a

This online table is located at: http://www.medcalc.org/manual/t-distribution.php

9

Q5: Data: EXCEL ﬁles Chp15 HomeValue.xls. Which should be your independent and dependent variables?

Perform your multiple regression analysis.

Answer:

Since it appears that we are trying to predict the score values, the “Score” column will be

our dependent variable. Meanwhile, both the “RecRes” and “Aﬀord” columns will be our

independent variables.

I used the “R” statistics package to generate the following multiple-regression ﬁt

summary:

Residuals:

Min 1Q Median 3Q Max

-6.0603 -2.2437 -0.1644 1.6569 7.7508

Coefficients:

Estimate Std. Error t value Pr(>|t|)

(Intercept) 33.4848 3.2281 10.373 9.03e-09 ***

RecRes 1.8998 0.2603 7.298 1.24e-06 ***

Afford 2.6108 0.4545 5.745 2.38e-05 ***

--

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 3.803 on 17 degrees of freedom

Multiple R-squared: 0.8067, Adjusted R-squared: 0.784

F-statistic: 35.47 on 2 and 17 DF, p-value: 8.57e-07

Most importantly from the above multiple-regression analysis results, we can distill

the following linear model formula to predict “Score” values:

y(x

1

, x

2

) = 33.48 + 1.9x

1

+ 2.61x

2

(1)

From the above linear model, y =“Score”; x

1

=“RecRes”; and x

2

=“Aﬀord”

After using formula #1 to predict some “Score” values, I concluded that: “There is a

strong linear correlation between variable “Score” and variables “RecRes” and “Aﬀord””.

Here are two examples of how I tested the linear model represented by formula #1:

y(8, 2) = 33.48 + 1.9(8) + 2.61(2) = 53.9

y(2, 7) = 33.48 + 1.9(2) + 2.61(7) = 55.55

The above predicted “Score” values are relatively close to the actual “Score” values from

the tabulated dataset.

10

84 range 92 skewness -0. equal to the sum of the squares of the deviation from the mean value. the mode is the most common (frequent) value. Negative kurtosis would indicates a ﬂat distribution. The range of a set of numbers is the largest value in the set minus the smallest value in the set.3. whereas “Relative Price” is the dependent variable. or data set. Positive kurtosis would indicates a peaked distribution.738 kurtosis 2. variance. medium. Negative values for the skewness indicate data that are skewed left and positive values for the skewness indicate data that are skewed right. Relative Price”. The smallest number such that at least half the numbers in the list are no greater than it.76. which is said to be platykurtic. Pearson’s coeﬃcient number would’ve been: 0. mode. variance 688. In this case the data are skewed left. is symmetric if it looks the same to the left and right of the center point. For lists. A list can have more than one mode.142 median 71 mode(s) 58. a Spearman’s correlation coeﬃcient is preferred over Pearson’s when the variables being tested are ordinal. it is leptokurtic. we can conclude that they are not related.299 4. “Middle value” of a list. I ﬁtted a linear regression line through the plots. Generate descriptive statistics for EPS rating and explain them (mean.094. kurtosis etc) Answer: I generated the following EPS rating descriptive statistics using the “R” statistics package: EPS Rating Descriptive Statistics Statistic Name mean Value 62. Its value is: 0. Measure of the average distance between each of a set of data points and their mean value. it appears that there is no correlation between the variables. In this case. range. Use regression analysis to determine if EPS Rating is related to Relative Price Strength Answer: See Figure #2 for a plot of “EPS Rating Vs.80. The kurtosis is a measure of the peakedness of the data distribution. or more precisely. divided by the total number of numbers in the list. A data set has no mode when all the numbers appear in the data with the same frequency. From visually inspecting the line ﬁt.18 2 . A distribution. mode. the lack of symmetry. Skewness is a measure of symmetry. which is said to be leptokurtic. Assuming |0. I conﬁrmed this assessment by interpreting the correlation coeﬃcient (using Spearman’s method)a .6| or higher for this number means the variables are related. “EPS Rating” is the independent variable.028 Meaning The sum of a list of numbers. skewness. I base this assessment on the observation that plot points do not cluster around the line.

Relative Price 70 q q q q q q q q q q q q q Relative Price 50 60 q q q q q q q 40 q q q q q 20 30 q q q q q q q q 10 q q 20 40 60 EPS Rating 80 100 Figure 2: Regression Analysis for EPS Rating Vs. Relative Price 3 .EPS Rating Vs.

P (X = 15) = 0 The above result means that there is virtually no chance of this happening.6481 + 0. I will use existing technology to generate a distribution table I can use to answer any questions: x 0 1 2 3 4 5 6 7 P (X = x)a 0.2x 0.6481 d) More then 6 will be rejected Answer: From the table I constructed and re-using the previous results: P (X > 6) = 1 − [P (X < 4) + P (X = 4) + P (X = 5) + P (X = 6)] = 1 − (0.0035 7e-04 1e-04 0 0 0 0 0 I rounded down to four digits.0138 a Note: x 8 9 10 11 12 13 14 15 P (X = x) 0.2501 0.2309 + 0. P (X = 0) = 0.2501 = 0.1032 0. What is the probability that among the next 15 applicants: a) None will be rejected Answer: From the table I constructed.1876 + 0.0352 b) All will be rejected Answer: From the table I constructed.8n−x Now let’s customize this function even further for this problem: P (X = x) =15 Cx 0.1876 0.Q2: 20% of applicants for a VISA card are rejected.0181 4 .815−x Also. Write down the probability distribution formula.0352 0.2309 0. as I’ve done on previous homework.0352 + 0.1319 + 0.1032 + 0.2x 0.1319 0. c) Less than 4 will be rejected Answer: From the table I constructed: P (X < 4) = P (X = 0) + P (X = 1) + P (X = 2) + P (X = 3) = 0. What is its expected rejection number and variance (formula and your calculation)? Answer: The general probability distribution function for this binomial distribution is: P (X = x) =n Cx px q n−x =n Cx 0.043 0.043) = 0.

599 − 0. minus 1%. total 2%).406 × 1. I’ll have to use the normal (Z) distribution table for this portion of the problem. 3.Q3: Data: EXCEL ﬁles Chp7 MetAreas.395 ¯ 5. and the sample variance is: 16.96 = 66. What is the 95% conﬁdence interval of the population mean? Answer: Since the Student’s t table does not show values for degree of freedom (df) equal to 99 (it jumps from 60 to 120). the mean has a Student’s t distribution.02 2 = 0.599 + 0.02 2 = 1583 5 .499.96 0.406 × 1. What is the expected Population mean for Rating? Answer: The expected population mean for the Rating is: µx ± σx = 67.96 Now. we use the formula: n= σx Z95% ¯ 0. 100 random samples were selected from US and Canada cities with Overall Rating for each city.803 ≥ µx ≤ 68.599.406 × 1.96 = 68.406 ¯ ¯ 4.499 σx = = 0.165 n 100 Since the population standard deviation is unknown.803 Upper limit = µx + σx Z95% ¯ ¯ = 67. 2. 1.599 ± 0.395 So the 95% conﬁdence interval is: 66. what should the sample size be? Answer: Assuming that the desired conﬁdence interval is still 95%. Looking up Z95% in the distribution table. we get: Z95% = 1. What is the variance of the mean? What is its distribution? Answer: The variance of the mean is computed as follows: 2 σx = ¯ 2 16.xls. we calculate the lower and upper limits: Lower limit = µx − σx Z95% ¯ ¯ = 67. What is the sample mean and variance? Answer: The sample mean is: 67. If we want the error to be 1% (plus.

062 √ 100 = −5.025 and z0.05 ≈ −0.9138 Now let’s lookup the left-tailed z-scores for each conﬁdence level: z0. If one states “the average Rating score for US and Canada cities is at least 70”. develop your null and alternative test at 1% and 5% level to see if the statement is true? Answer: Again. we can reject the null hypothesis and conclude that: “the average Rating score for US and Canada cities is less than 70”. 6 .01 ≈ −0.599 − 70 4.6. let’s establish the hypotheses: H0 : µ ≥ 70 ⇒ Ha : µ < 70 Now lets’s calculate the z-score: zcalc = 67.125 Since zcalc is oﬀ the chart to the far left: At both the 1% and 5% signiﬁcance levels. First. because the book’s Student’s t table does not have values for df = 99. we will have to calculate the z-score and use the normal probability table.

296 15624.045 ± 2.141 df 27 21 Cherry Grove Beechmont A conﬁdence level was not stated. Instead of using the book’s t table.php .197c .242 = 193.0.955 + 78.medcalc. Some samples from two branches of BECU were selected about the check balance. This yielded that tn−1.296 2 1 + 22−1 15624.05). 1.141 28 22 2 22500.org/manual/t-distribution.242 The above means that there is a 95% certainty that the diﬀerence between the population means is between: 36.955 7 . we use the following formula: x1 − x2 ± tα/2 ¯ ¯ To ﬁnd tα/2 we must compute the combined df : 2 s2 s2 2 1 n1 + n2 2 s2 1 + n21 n1 −1 2 22500.025 = 2. What is the sample mean and variance for each branch? What is the diﬀerence between the two sample mean? Answer: Here is the sample mean and variance for each branch (the df is also included): Sample Mean 1025 910.011 114. So for the difference.Q4: Data: EXCEL ﬁles Chp10 CheckAcct.713 c 114.955 ± 78.141 + 28 22 online table is located at: http://www.713b and 193.242 = 36. so I will assume 95% (α = 0.045 Sample Variance 22500.296 + 15624.011 Now we go back to the ﬁrst formula and plug in values: 1025 − 910.141 28 22 s2 s2 1 + 2 n1 n2 df = 1 n1 −1 s2 2 n2 2 = 1 28−1 = 47.78. a This 22500. I found one onlinea that included two-tail values for df = 48.α/2 = t48.xls.197 b 114.81 ≈ 48 The book’s t table jumps from df = 40 to df = 60.296 15624.

calculate the F -value: Fcalc = 22500. let’s state the hypotheses: H0 : σ1 = σ2 ⇒ Ha : σ1 = σ2 Second.0102 Lastly. 8 .21 = 2. we fail to reject the null hypothesis and conclude that: “both standard deviations are equal (σ1 = σ2 )”. Note that since this is a two-tailed test.21 ). First.296 s2 1 = = 1. Use F test to see if their variance is the same? Answer: Again. so I will assume 95% (α = 0. 21). a conﬁdence level was not stated.05 (30.44 s2 15624.141 2 Since most f test tables do not have df = 27 for v1 .21 in the table: F30. Third.05). lookup F30. we will use f0. our conﬁdence level will be reduced to 90%.2. we compare F -values and come to a conclusion: Since (Fcalc < F30.

medcalc. Now. at a 5% level. comparing the left tail according to the online table. we will need to use a t-test because the population standard deviations are unknown. It is ≈ 48. a This online table is located at: http://www. Instead of using the book’s t table.186 + + 15624. indeed: “the diﬀerence of checking balance between the 2 branches is at least $200”. this is because we are interested in wether the diﬀerence from one account to the other is ±$200.org/manual/t-distribution.005 = −3.505 According to this comparison.php 9 . and since α/2 = 0.0.045) − 200 22500.0.025 = −2. The book’s t table jumps from df = 40 to df = 60.186 < t48. Answer: First oﬀ. Here are the hypotheses: H0 : µ1 − µ2 − 200 = 0 ⇒ Ha : µ1 − µ2 − 200 = 0 Now let’s calculate the t-value: tcalc = (¯1 − x2 ) − 200 x ¯ s2 1 n1 s2 2 n2 = (1025 − 910.296 28 = −2. I found one onlinea that included two-tail values for df = 48. we just barely fail to reject the null and conclude that.3.025 at 5%: tcalc = −2.011 According to this comparison.005 at 1%: tcalc = −2. If one states “the diﬀerence of checking balance between the 2 branches is at least $200”. Comparing the left tail according to the online table.141 22 We’re also going to need the combined df which we already calculated for the ﬁrst problem. do you use t-test or z-test for your test? Why? Is it one-tail or two-tails test? Develop your test at 1% and 5% level and show your result. we reject the null and conclude that: “the diﬀerence of checking balance between the 2 branches is less than $200”. and since α/2 = 0.186 > t48. It is a two-tail test where the critical regions fall on the left and right tails. at a 1% level.

9(2) + 2. 7) = 33.9(8) + 2.61(7) = 55. Which should be your independent and dependent variables? Perform your multiple regression analysis.8998 0. the “Score” column will be our dependent variable.55 The above predicted “Score” values are relatively close to the actual “Score” values from the tabulated dataset.2281 10.803 on 17 degrees of freedom Multiple R-squared: 0.48 + 1. I used the “R” statistics package to generate the following multiple-regression ﬁt summary: Residuals: Min -6. and x2 = “Aﬀord” After using formula #1 to predict some “Score” values. Adjusted R-squared: 0.’ 0.4848 3. y = “Score”.05 ‘.2603 7.61x2 From the above linear model.001 ‘**’ 0.47 on 2 and 17 DF. both the “RecRes” and “Aﬀord” columns will be our independent variables.48 + 1.1 ‘ ’ 1 Residual standard error: 3. x2 ) = 33.745 2.48 + 1.373 9. 2) = 33.784 F-statistic: 35. I concluded that: “There is a strong linear correlation between variable “Score” and variables “RecRes” and “Aﬀord””.01 ‘*’ 0.xls.0603 Coefficients: Estimate Std. p-value: 8. Answer: Since it appears that we are trying to predict the score values.03e-09 *** RecRes 1.298 1. (1) 10 .7508 Most importantly from the above multiple-regression analysis results.4545 5.8067.9x1 + 2.2437 Median -0.61(2) = 53.57e-07 1Q -2.38e-05 *** -Signif. we can distill the following linear model formula to predict “Score” values: y(x1 .6569 Max 7. Error t value Pr(>|t|) (Intercept) 33. x1 = “RecRes”.Q5: Data: EXCEL ﬁles Chp15 HomeValue. codes: 0 ‘***’ 0.1644 3Q 1.9 y(2. Here are two examples of how I tested the linear model represented by formula #1: y(8.6108 0. Meanwhile.24e-06 *** Afford 2.

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