Exhibit 12-10
the Following Information Regarding a Dependent Variable Y

question 132

Essay

Exhibit 12-10
The following information regarding a dependent variable Y and an independent variable X is provided.
$$\begin{array} { l } \mathrm { n } = 4 \\\Sigma \mathrm { X } = 16 \\\Sigma \mathrm { Y } = 28 \\\Sigma \mathrm { Y } - { \bar { Y )} } \mathrm { X } - \bar { X } ) = - 8 \\\Sigma \mathrm { X } - \bar { X } ) ^ { 2 } = 8 \\\mathrm { SST } = 42 \\\mathrm { SSE } = 34\end{array}$$
-The following data represent the number of flash drives sold per day at a local computer shop and their prices.
$\begin{array}{cc}\text { Price } x)&\text { Units Sold y) }\\\$ 34 & 3 \\36 & 4 \\32 & 6 \\35 & 5 \\30 & 9 \\38 & 2 \\40 & 1\end{array}$
a. Develop a least-squares regression line and explain what the slope of the line indicates.
b. Compute the coefficient of determination and comment on the strength of relationship between x and y.
c. Compute the sample correlation coefficient between the price and the number of flash drives sold. Use ?= 0.01 to test the relationship between x and y.

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Definitions:

Increase Risk

The action or process of raising the level of danger or the chance of loss in a financial investment or business venture.

Expected Rate

The predicted interest rate or return for an investment over a specific period.

Diversification Effects

The reduction in risk achieved by investing in a variety of assets, thus minimizing the impact of poor performance from any single asset.

Portfolio A

A specific collection of financial assets such as stocks, bonds, cash equivalents, and their mutual funds, owned by an individual or an institutional investor.