# Linear regression model

In a study of foreign holdings in the U.S. banks, year-end share of assets in U.S. bank subsidiaries held by foreigners (as a percentage of total assets) was related to:

X1 = Annual change, in billions of dollars, in foreign direct investment in the U.S. (excluding finance, insurance, and real estate);

X2 = Bank price-earnings ratio;

X3 = Index of the exchange value of the dollar.

The regression results from the sample data gave the following population parameter estimates:

a = -3.248 b1= .101 b2= -.244 b3=.057 R2=.93

What is the estimated year-end share of assets in U.S. bank subsidiaries held by foreigners for a particular year if the annual change in foreign direct investment in the U.S., (excluding finance, insurance, and real estate) was $50 Billion, the bank price-earnings ratio was 12, and the index of exchange value of the dollar was 175?

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The estimated regression equation is Y= ...

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The solution provides step by step method for the calculation of linear regression model . Formula for the calculation and Interpretations of the results are also included.