Creating and assessing a regression equation
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A sample of 30 computer hardware companies taken from Stock Investor Pro provided the data in the Excel sheet. This data included the price per share, book value per share, and the return on equity per share for each.
1. Develop an estimated regression equation that can be used to predict the price per share given the book value per share. At the .05 level of significance, test for a significant regression relationship. What is your conclusion? Be specific.
2. Did the estimated regression equation in part 1 provide a good fit to the data? Explain with specific details.
3. Develop an estimated regression that can be used to predict the price per share given the book value per share and the return on equity per share. At the .05 level of significance, test for overall significance.
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Solution Summary
This solution shows how to formulate a regression equations for the given problem, how to test for significance, and how to assess whether or not the equation was a goof fit for this data.
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