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Analysis of Variance (ANOVA) - F test

See the attached file.
Happy Fund's manager believes that the return on Airline shares is dependent the fluctuations in oil prices and interest rates. He collects the weekly data on the share prices, oil prices, and interest rates. Use the data provided and regression analysis and show whether oil prices and interest rate affect the returns on Airline share.

All tests should be done on 5% level of significance.

Date Airline Crude Oil Price 10-yr Interest Rate
8/1/10 13.9 78.89 3.83
15/1/10 14.42 78.65 3.7
22/1/10 13.48 75.26 3.62
29/1/10 12.8 71.99 3.63
5/2/10 13.08 72.28 3.59
12/2/10 14.12 70.42 3.69
19/2/10 13.96 73.46 3.78
26/2/10 14.42 75.98 3.61
5/3/10 14.78 76.45 3.69
12/3/10 15.32 78.17 3.71
19/3/10 15.64 77.92 3.7
26/3/10 16.16 77.6 3.86
2/4/10 16.46 78.62 3.96
9/4/10 16.52 82.57 3.9
16/4/10 15.88 83.03 3.79
23/4/10 16.7 82.24 3.84
30/4/10 16.4 83.56 3.69
7/5/10 15.18 81.71 3.45
14/5/10 15.7 76.56 3.44
21/5/10 15.02 71.17 3.2
28/5/10 15 67.91 3.31
4/6/10 15.7 70.97 3.2
11/6/10 15.54 70.68 3.24
18/6/10 15.8 73.85 3.24
25/6/10 15.9 75.09 3.12
2/7/10 15.34 73.54 3
9/7/10 15.58 71.72 3.07
16/7/10 15.62 73.49 2.96
23/7/10 16.36 73.8 3.02
30/7/10 17.28 74.69 2.94
6/8/10 18.5 78.68 2.86
13/8/10 18.9 77.28 2.68
20/8/10 19.54 73.81 2.62
27/8/10 19.14 71.28 2.66
3/9/10 19.8 73.45 2.72
10/9/10 21.4 74.42 2.81
17/9/10 21.4 76.11 2.75
24/9/10 21 75.14 2.62
1/10/10 21 76.14 2.54
8/10/10 22.1 80.89 2.41
15/10/10 21.9 80.85 2.59
22/10/10 20.95 79.35 2.59
29/10/10 20.85 79.54 2.63
5/11/10 21.65 81.96 2.58
12/11/10 22.05 85.54 2.76
19/11/10 23 82.82 2.88
26/11/10 22.7 81.17 2.87
3/12/10 23.75 84.16 3.03
10/12/10 23.4 88.18 3.32
17/12/10 22.2 88.34 3.33
24/12/10 21.55 89.43 3.32
31/12/10 21.45 90.61 3.3
7/1/11 22.45 91.04 3.34.

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Solution Preview

A Multiple Regression Analysis has been performed to analyze whether oil prices and interest rate affect the returns on Airline share. In this analysis, the dependent variable is the Airline Share. Crude Oil Price and 10-Year Interest Rate are the independent variables or predictors, which have been used for predicting the dependent variable. The Multiple Regression Analysis has been performed in EXCEL.

The regression equation is given as

y=0.795x_1 - 5.1052x_2 + 4.6815
where x_1 represents the independent variable Crude ...

Solution Summary

The solution discusses the analysis of variance (ANOVA) regarding the f-test.

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