statistics for financial decision | assignment

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STATISTICS FOR FINANCIALDECISION
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1TASK 2............................................................................................................................................2TASK 3............................................................................................................................................4Presenting full model..................................................................................................................4TASK 4............................................................................................................................................5Least squares regression equation and interpreting the equation................................................5TASK 5............................................................................................................................................5Interpreting estimated coefficients of regression model with discussion of significance values.....................................................................................................................................................5TASK 6............................................................................................................................................7Value of coefficient of determination for relationship among dependent and independentvariables......................................................................................................................................7TASK 7............................................................................................................................................7Stating 95% confidence interval for every parameter.................................................................7TASK 8............................................................................................................................................8TASK 9............................................................................................................................................8Comparing original and re-estimated model...............................................................................8TASK 10..........................................................................................................................................9Predicting market price of house with 400 square meters..........................................................9CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONThe term statistics is concerned with the process of numerical and data analysis of thegiven data set values. By making correct and proper analysis, interpretation of the given data set,sound and effective business and financial decision can be made for the betterment of businessoperations. The present report is based on regression analysis, which is considered as one of themost important statistical business tool. With the help of this statistical tool, relationship betweentwo variables can be studied. Influence of one or more independent variables on a dependentvariable can be examined. The report will contain plotting of dependent variable againstindependent variable by using scatter plot or dot function and relationship from this plotting. Itwill disclose concept of the least square regression equation along with interpretation. At last,comparison and evaluation of goodness of fit between the original model and re estimated modelwill be made.TASK 1Rationale and details of Regression Model –The term regression is considered as one ofthe most important statistical tool which helps the company in examining the relationshipbetween two or more independent variable on a dependent variable (Bun and Harrison, 2018). Inthe above table the Sample Size calculated is 18. Also, for the question the dependent variable isMarket Price ($000) and independent variables are Sydney price Index, Annual % change, Totalnumber of square meters and Age of house (years).Regression StatisticsMultiple R0.8999R Square0.8098Adjusted R Square0.7512Standard Error45.0011Observations18CoefficientsStandardErrort StatP-valueLower95%Upper95%Lower95.0%Upper95.0%Intercept531.46380.3866.6110.000357.801705.126357.801705.126Sydneyprice2.2640.5604.0430.0011.0543.4731.0543.4731
IndexAnnual %change-6.3103.060-2.0620.060-12.9190.300-12.9190.300Totalnumber ofsquaremeters0.5070.3151.6070.132-0.1741.187-0.1741.187Age ofhouse(years)-2.6371.146-2.3010.039-5.113-0.161-5.113-0.161TASK 2Sydney Price Index6080100120140160180200-100-50050100Sydney price Index Residual PlotSydney price IndexResidualsInterpretation:The above graph is reflecting scatter plot of market price and SydneyPrice index which shows no correlation due to spread out which signifies absence of trend tocorrelation.Regression StatisticsMultiple R0.8277R Square0.6851Adjusted R Square0.6654Standard Error52.1937Observations182
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