A Regression Analysis (Involving 45 Observations) Relating a Dependent Variable $\widehat { y }$

question 16

Essay

A regression analysis (involving 45 observations) relating a dependent variable (y) and two independent variables resulted in the following information.
​ $\widehat { y }$ = 0.408 + 1.3387x₁ + 2x₂
​
The SSE for the above model is 49.
When two other independent variables were added to the model, the following information was provided.
​ $\widehat { y }$ = 1.2 + 3.0x₁ + 12x₂ + 4.0x₃ + 8x₄
​
This latter model's SSE is 40.
At a 5% significance level, test to determine if the two added independent variables contribute significantly to the model.

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Definitions:

Foreign Currency Transaction

A business operation involving the exchange of currencies from two different countries.

Spot Rate

The current market price at which a particular currency can be bought or sold for immediate delivery.

Receivable

Amounts owed to a company by its customers or debtors for goods or services delivered that have not yet been paid.

Pooling of Interests Transaction

A method used in accounting for business mergers in which the assets and liabilities of the merging companies are combined using their book values.