The Following Is Part of the Results of a Regression $\alpha$

question 25

Essay

The following is part of the results of a regression analysis involving sales (y in millions of dollars), advertising expenditures (x₁ in thousands of dollars), and number of salespeople (x₂) for a corporation. The regression was performed on a sample of 10 observations.
a.If the company uses $40,000 in advertisement and has 30 salespersons, what are the expected sales? Give your answer in dollars.
b.At $\alpha$ = 0.05, test for the significance of the coefficient of advertising.
c.At $\alpha$ = 0.05, test for the significance of the coefficient of the number of salespeople.

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Definitions:

Expected Return

The anticipated profit or loss from an investment, calculated as an average of all possible outcomes weighted by their likelihood of occurrence.

Reward To Risk Ratio

A metric used by investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Risk Premium

The additional return expected by an investor for taking a higher risk.

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by government bonds.