7. The Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 (S&P) indexes are both used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some say the S&P 500 is a better measure of stock market performance because it is broader based. The closing prices for the DJIA and the S&P 500 for 10 weeks, beginning Feb 11/2000, follow(Barron's, April 17, 2000).
a. Develop a scatter diagram for these data with DJIA as the independent variable.
b. Develop the least squares estimated regression equation.
c. Suppose the closing price for the DJIA is 11000. Estimate the closing price for the S&P 500.