Learn to develop regression models to predict annual rate of return for a stock and average monthly heating cost of a house. Get detailed solutions for Regression Analysis Assignment for Fall 2018. Download data from D2L and get graded on accurate analysis.
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Assignment 6 – Regression Analysis Fall 2018 The due date for the assignment 6 is11/4/2018 (midnight).It must be submitted through the “Assignment 6 – Regression Analysis” in Assignment Submission Folder provided in D2L. It is important that you specify your name in the assignment document/attachment. The attachment name should follow the following convention: BUSA542_ASSIGNMENT6_FIRSTNAME_LASTNAME.XLSX. For each problem, pleaseprovide detail solution and written answers in a separate Excel tab. Your model must be stored in different tab to get full credit: 1.An analyst for Phidelity Investments wants to develop a regression model to predict the annual rate of return for a stock based on the price-earnings (PE) ratio of the stock and a measure of the stock’s risk. Download the data from D2L to answer the following questions: A.Prepare scatter plots for each independent variable versus the dependent variable. What type of model do these scatter plots suggest might be appropriate for the data? (1 point) B.Let Y = Return, X1= PE Ratio, and X2= Risk. Obtain the regression results for the following regression model: 𝑌𝑖̂= 𝑏0+ 𝑏1𝑋1𝑖+𝑏2𝑋2𝑖 Interpret the value of R2for this model (1 point). C.Obtain the regression results for the following regression model: 𝑌𝑖̂= 𝑏0+ 𝑏1𝑋1𝑖+𝑏2𝑋2𝑖+𝑏3𝑋3𝑖+𝑏4𝑋4𝑖 Where𝑋3𝑖=𝑋1𝑖 2and𝑋4𝑖=𝑋1𝑖 2. Interpret the value of R2for this model (1 point). D.Which of the previous two models would you recommend that the analyst use? Explain your reasons (1 point). 2.Caveat Emptor, Inc. is a home inspection service that provides prospective home buyers with a thorough assessment of the major systems in a house prior to the execution of the purchase contract. Prospective home buyers often ask the company for an estimate of the average monthly heating cost of the home during the winter. To answer this question, the company wants to build a regression model to help predict the average monthly heating cost (Y) as a function of the average outside temperature in winter (X1), the amount of attic insulation in the house (X2), the age of the furnace in the house (X3), and the size of the house measured in square feet (X4). Download the data from D2L to answer the following questions: A.Prepare scatter plots showing the relationship between the average heating cost and each of the potential independent variables. What sort of relationship does each plot suggest? Explain your reasons (1 points). B.If the company wanted to build a regression model using only one independent variable to predict the average heating cost of these houses, what variable should be used? Explain your reasons (1 points).
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C.If the company wanted to build a regression model using only two independent variables to predict the average heating cost of these houses, what variables should be use? Explain your reasons (1 points). D.If the company wanted to build a regression model using only three independent variables to predict the average heating cost of these houses, what variables should be use? Explain your reasons (1 points). E.Suppose the company chooses to use the regression function with all four independent variables. What is the estimated regression function? Explain your reasons (1 points). F.Suppose the company decides to use the model with the highest adjusted R2statistic. Develop a 95% prediction interval for the average monthly heating cost of a house with 4 inches of attic insulation, a 5-year-old furnace, 2500 square feet, and in a location with an average outside winter temperature of 40. Interpret this interval (1 points). The following criteria will be used to grade the assignment: Answers are detailed, accurate, and analysis are correct. ***************************NOTE ************************************* Please feel free to consult your instructor by email or phone, if you have questions or need assistance!!