# Statistics

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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).

Date-DJIA-S&P

Feb 11-10452-1387

Feb 18-10220-1346

Feb 25-9862-1333

Mar 3-10367-1409

Mar 19-9929-1395

Mar 17-10595-1464

Mar 24-11113-1527

Mar 31-10922-1499

Apr 7-11111-1516

Apr 14-10306-1357

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.

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