The prices (in $) 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
?
Excel was used to determine the least squares regression equation. Part of the computer output is shown below.
ANOVA ?
df
SS
MS
F
Significance F
Regression2
118.8474
59.4237
40.9216
0.0000
Residual9
13.0692
1.4521
Total11
131.9167
?
?
?
Coefficients
Standard Error
t Stat
P-value
Intercept118.5059
33.5753
3.5296
0.0064
(x1)-0.0163
0.0315
-0.5171
0.6176
(x2)-1.5726
0.3590
-4.3807
0.0018
a. Use the output shown above and write an equation that can be used to predict the price of the stock.b.Interpret the coefficients of the estimated regression equation that you found in Part a.c.At a .01 level of significance, determine which variables are significant and which are not.d.If on 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?
What will be an ideal response?
| a. |  = 118.5059 - .0163x1 - 1.5726x2 |
| 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 NYSE constant). As the volume of exchange on the NYSE goes up by 1 unit, the stock price goes down by $1.5726 (holding the number of shares of the stock sold constant). |
| c. | no evidence that x1 is significant; the p-value = .6176 >? = .01. x2 is significant; the p-value = .0018 <? = .01. |
| d. | $77.94 (rounded) |
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