THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 196

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
For a sample of 20 monthly observations a financial analyst wants to regress the percentage rate of return (y)of the common stock of a corporation on the percentage rate of return (x)of the Standard and Poor's 500 Index.The following summary statistics are available:
,
,
,and
-Interpret the slope of the sample regression line.

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Definitions:

Precautionary Need

The motive to hold cash or assets to safeguard against unexpected emergencies or transactions.

Speculative Need

A financial concept where individuals or businesses hold cash or assets in speculation of market changes, expecting to profit from fluctuations in prices or exchange rates.

Transactions Need

encapsulates the necessity for exchanges or trades to occur within an economy or market for goods, services, financial assets, or currencies.

Zero-Balance Account

A bank account in which the balance is maintained at zero by automatically transferring funds from a master account.