REGRESSION. INTRODUCTION. The statistical measure that
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REGRESSIONINTRODUCTIONThe statistical measure that is used in field of finance, investing and other areas whosepurpose is to determine the strength of relationship between one variable that isdependent denoted by Y and other variables that are changing known as independentvariables which are in form of a series.PURPOSE OF REGRESSION ANALYSISRegression analysis is a statistical tool whose main purpose is to identify the correlationbetween the variables that are independent which can be one or more and a singledependent variable. The two most important uses of regression analysis in businessapplications are forecasting and optimisation (Dr. Douglas, Chapter3).TWO EXAMPLES OF SITUATIONS IN BUSINESS WHERE REGRESSION ISUSEDThe two most important uses of regression analysis in business applications are:1.In a stock market, predicting the Stock price with respect to movements in GDP(Gross Domestic Product). Here the independent variable is GDP, and dependentvariable is Stock Price.2.Impact of changes in 10-year Treasury Bond yield on the earning yield of theS&P 500 US Equity Market Index (Richard et al., 2015). REFERENCESRichard A. Defusco, Dennis W. Mcleavery, Jerald E. Pinto and David E. Runkle,Correlation and Regression, October 2015.Dr. Douglas Hawks, Using Regression Analysis in Business, Chapter 3, Lesson 7.
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