THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 166

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
An economist is in the process of developing a model to predict the price of gold.She believes that the two most important variables are the price of a barrel of oil (x₁)and the interest rate (x₂).She proposes the model y = β₀ + β₁x₁ + β₂x₂ + β₃x₁x₃ + ε.A random sample of 20 daily observations was taken.The computer output is shown below.
THE REGRESSION EQUATION IS
y = 115.6 + 22.3x₁ + 14.7x₂ - 1.36x₁x₂

S = 20.9 R-Sq = 55.4%
ANALYSIS OF VARIANCE

-In the regression model Y = β₀ + β₂X₁ + β₂X₂ + ε,the extent of any multicollinearity can be evaluated by finding the correlation between X₂ and X₂ in the sample.Explain why this is so.

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Definitions:

Pay To

A directive on checks or drafts indicating to whom the payment is to be made.

Insurer's Name

Refers to the legal name of the company or entity which provides insurance coverage to policyholders.

Order Instrument

A financial document that is payable to a specific person or entity named on the document, necessitating endorsement for transfer.

Specific Payee

indicates a person or entity named explicitly in a negotiable instrument as the recipient of the payment.