Answer to Question #325340 in Management for Sihle

Question

An investigation into the relationship between the price of fixed interest stock and the prime lending rate was conducted over 12 randomly chosen days. The following results were obtained.

Price of fixed interest stock 56 58 57 56 55 55 56 54 56 55 64 69

Prime lending rate (%) 8.7 8.7 9.0 9.6 10.0 9.6 9.5 10.5 8.4 9.0 8.0 7.0

a) Does the price of fixed interest stock depend on the prime lending rate or does the prime lending rate depend on fixed interest stock? Also what kind of a relationship is expected between the two variable? [2 marks]

b) Compute SSxx, SSyy, and SSxy [6 marks]

c) Find the least-squares regression line for this data. [6 marks]

d) Estimate the price of the stock when the rate of interest is 8.5%. [1 mark]

e) Find the product moment coefficient of correlation and comment [3 marks]

f) Find the coefficient of determination and interpret it. [2 marks]