The Printout Below Shows Part of the Least Squares Regression $E ( y ) = \beta _ { 0 } + \beta _ { 1 } x _ { 1 } + \beta _ { 2 } x _ { 2 }$

question 7

Essay

The printout below shows part of the least squares regression analysis for the model $E ( y ) = \beta _ { 0 } + \beta _ { 1 } x _ { 1 } + \beta _ { 2 } x _ { 2 }$ fit to a set of data. The model attempts to predict a score on the final exam in a statistics course based on the scores on the first two tests in the class.
ANOVA
$\begin{array} { l l l l l l } \hline & d f & S S & M S & F & \text { Significance F } \\\hline \text { Regression } & 2 & 1293.125328 & 646.5626641 & 21.27366772 & 2.35769 \mathrm { E } - 05 \\\text { Residual } & 17 & 516.6746719 & 30.39262776 & & \\\text { Total } & 19 & 1809.8 & & & \\\hline\end{array}$

$\begin{array}{lllllll}\hline & \text { Coefficients } & \text { Standard Error } & \text { t Stat } & \text { P-value } & \text { Lower 95\% } & \text { Upper 95\% } \\\hline \text { Intercept } & -4.409686163 & 16.72267106 & -0.263695085 & 0.795184685 & -39.69148734 & 30.87211502 \\\text { Test 1 } & 0.397435806 & 0.343012569 & 1.158662514 & 0.262611745 & -0.326258467 & 1.121130079 \\\text { Test 2 } & 0.638805278 & 0.224623383 & 2.843894834 & 0.011217936 & 0.164890704 & 1.112719852 \\\hline\end{array}$
Is there evidence of multicollinearity in the printout? Explain.

---

Definitions:

Buyers and Sellers

The participants in a market who determine the demand for and supply of goods and services, influencing prices and market dynamics through their transactions.

Parity Values

Equal-valued metrics that compare different financial instruments, such as conversion parity between options and stocks.

Index Arbitrage

A trading strategy that attempts to profit from the differences between actual and theoretical futures prices of the same stock index.

Actual Future Prices

The real prices at which assets, commodities, or securities will be traded in the future, as opposed to predicted or estimated prices.