Question: A research analyst at an investment firm

> Using 30 observations, the following regression output is obtained from estimating the linear probability model y = β0 + β1x + ε. a. What is the predicted probability when x = 20? b. Is x significant at the 5% leve

> Consider a binary response variable y and two explanatory variables x1 and x2. The following table contains the parameter estimates of the linear probability model (LPM) and the logit model, with the associated p-values shown in parentheses. a. Comment

> According to the Organization of Economic Cooperation and Development, South Koreans spend more hours per year on the job than people in any other developed country (The Wall Street Journal, March 1, 2010). Suppose 10 workers in South Korea and 10 worker

> Consider a binary response variable y and an explanatory variable x. The following table contains the parameter estimates of the linear probability model (LPM) and the logit model, with the associated p-values shown in parentheses. a. Use both models t

> Consider a binary response variable y and an explanatory variable x. The following table contains the parameter estimates of the linear probability model (LPM) and the logit model, with the associated p-values shown in parentheses. a. Test for the sign

> Consider a binary response variable y and an explanatory variable x that varies between 0 and 50. The linear probability model is estimated as. a. Compute the estimated probability for x = 25 and x = 40. b. For what values of x is the estimated proba

> Mechanics Consider a binary response variable y and an explanatory variable x that varies between 0 and 4. The linear model is estimated as. a. Compute the estimated probability for x = 2 and x = 3. b. For what values of x is the estimated probabilit

> The following table shows a portion of monthly data on the personal savings rate (Savings in %) and personal disposable income (Income in $ billions) in the U.S. from January 2007 to November 2010. a. Estimate and interpret a log-log model, ln (Savings

> One of the theories regarding initial public offering (IPO) pricing is that the initial return (the percentage change from offer to open price) on an IPO depends on the price revision (the percentage change from pre-offer to offer price). Another factor

> The distribution center for an online retailer has been experiencing quite a few “pick errors” (i.e., retrieving the wrong item). Although the warehouse manager thinks most errors are due to inexperienced workers, she

> . According to the World Health Organization, obesity has reached epidemic proportions globally. While obesity has generally been linked with chronic disease and disability, researchers argue that it may also affect wages. In other words, the body mass i

> A sociologist is looking at the relationship between consumption expenditures of families in the United States (Consumption in $), family income (Income in $), and whether or not the family lives in an urban or rural community (Urban = 1 if urban, 0 othe

> House price y is estimated as a function of the square footage of a house x; a dummy variable d that equals 1 if the house has ocean views and 0 otherwise; and the interaction variable xd. The estimated house price, measured in $1,000s, is given by a.

> An analysis of census data suggests that married men have a higher median income than unmarried men (The Boston Globe, January 19, 2010). Suppose the incomes (in $1,000s) of six married men and seven unmarried men produce the following results: a. Set

> A random sample of eight drugstores shows the following prices (in $) for a popular pain reliever: a. Specify the competing hypotheses to determine whether the median price is less than $6.00. b. Calculate the value of the test statistic. c. The p-va

> The annual salary of an employee y (in $1,000s) is estimated as a function of years of experience x; a dummy variable d that equals 1 for college graduates and 0 for those graduating from high school but not college; and the interaction variable xd. The

> Using 20 observations, the following regression output is obtained from estimating y = β0 + β1x + β2d + β3xd + ε. a. Compute for x = 10 and d = 1; compute for x = 10 and d = 0. b. Are the du

> Consider a linear regression model where y represents the response variable and x and d are the explanatory variables; d is a dummy variable assuming values 1 or 0. A model with the dummy variable d and the interaction variable xd is estimated as ŷ

> A government researcher is analyzing the relationship between retail sales (in $ millions) and the gross national product (GNP in $ billions). He also wonders whether there are significant differences in retail sales related to the quarters of the year.

> The general manager of QuickFix, a chain of quick-service, no appointment auto repair shops, wants to develop a model to forecast monthly vehicles served at any particular shop based on four factors: garage bays, population within 5-mile radius (Populati

> The issues regarding executive compensation have received extensive media attention (The New York Times, February 9, 2009). Consider a regression model that links CEO compensation (in $ millions) with the total assets of the firm (in $ millions) and the

> In an attempt to “time the market,” a financial analyst studies the quarterly returns of a stock. He uses the model y = β0 + β1d1 + β2d2 + β3d3 + ε where y i

> A manager at an ice cream store is trying to determine how many customers to expect on any given day. Overall business has been relatively steady over the past several years, but the customer count seems to have ups and downs. He collects data over 30 da

> Use the accompanying data to estimate a linear regression model with Math as the response variable and GPA and Female as the explanatory variables. a. Compute the predicted math score for a male student with a GPA of 3.5. Repeat the computation for a fe

> The SAT has gone through many revisions over the years. People argue that female students generally do worse on math tests but better on writing tests. Consider the following portion of data on 20 students who took the SAT test last year. Information inc

> A professor teaches two sections of an introductory statistics course. He gives each section the same final and wonders if any significant differences exist between the medians of these sections. He draws a sample of seven scores from Section A and six s

> In the United States, baseball has always been a favorite pastime and is rife with statistics and theories. While baseball purists may disagree, to an applied statistician no topic in baseball is too small or hypothesis too unlikely. Researchers at Wayne

> A researcher wonders whether males get paid more, on average, than females at a large firm. She interviews 50 employees and collects data on each employee’s hourly wage (Wage in $), years of higher education (EDUC), years of experience

> According to the World Health Organization, obesity has reached epidemic proportions globally. While obesity has generally been linked with chronic disease and disability, researchers argue that it may also affect salaries. In other words, the body mass

> One of the theories regarding initial public offering (IPO) pricing is that the initial return y (the percentage change from offer to open price) on an IPO depends on the price revision x (the percentage change from pre-offer to offer price). Another fac

> A sociologist is studying the relationship between consumption expenditures of families in the United States (Consumption in $), family income (Income in $), and whether or not the family lives in an urban or rural community (Urban = 1 if urban, 0 otherw

> House price y is estimated as a function of the square footage of a house x and a dummy variable d that equals 1 if the house has ocean views. The estimated house price, measured in $1,000s, is given by = 118.90 + 0.12x + 52.60d. a. Compute the predicte

> Applications An executive researcher wants to better understand the factors that explain differences in salaries for marketing majors. He decides to estimate two models: y = β0 + β1d1 + ε (Model 1) and y = β0 + β1d1 + β2d2 + ε (Model 2). Here y represent

> Using 50 observations, the following regression output is obtained from estimating y = β0 + β1x + β2d1 + β3d2 + ε. a. Compute for x = 250, d1 = 1, and d2 = 0; compute for x = 250, d1 = 0, and

> Consider a linear regression model where y represents the response variable and d1 and d2 are dummy variables. The model is estimated as ŷ = 160 + 15d, + 32dz- a. Compute î for d1 = 1 and d2 = 1. b. Compute i for d1 = 0 and d2 = 0. %3D

> Mechanics Consider a linear regression model where y represents the response variable, x is a quantitative explanatory variable, and d is a dummy variable. The model is estimated as ŷ = 14.8 + 4.4x – 3.8d a. Interpret the dummy variable coefficient.

> A bank employs two appraisers. When approving borrowers for mortgages, it is imperative that the appraisers value the same types of properties consistently. To make sure that this is the case, the bank asks the appraisers to value 10 different properties

> The consumption function is one of the key relationships in economics, where consumption (y) depends on disposable income (x). Consider the following table, which presents a portion of quarterly data on personal consumption expenditure and disposable inc

> The S&P 500 Index is a value-weighted index of prices of 500 large-cap common stocks actively traded in the United States. A research analyst at an investment firm is attempting to forecast the daily stock price of Genzyme Corporation, one of the wor

> The following data represent a portion of quarterly net sales (in $ millions) of Lowe’s Companies, Inc., over five years. a. Estimate a linear trend model with seasonal dummy variables and compute MSE and MAD. b. Estimate an exponent

> Refer to the previous exercise for a description of the data set. Previous exercise: Revenue passenger-miles are calculated by multiplying the number of paying passengers by the distance flown in thousands. The accompanying table shows a portion of mon

> Revenue passenger-miles are calculated by multiplying the number of paying passengers by the distance flown in thousands. The accompanying table shows a portion of monthly data on revenue passenger-miles (in millions) from January 2006 through September

> While U.S. inventory levels remain low, there is a slight indication of an increase in the U.S. business inventory-to-sales ratio, due to higher sales (The Wall Street Journal, December 15, 2010). The accompanying table shows a portion of seasonally adju

> Consider the following portion of data on real estate loans granted by FDIC insured Commercial Banks in the United States (in $ billions, base = 2007) from 1972 to 2007. Year ………………………………………………………………………………………………… Loans 1972 ……………………………………………………………………………

> Consider the following portion of monthly data on price per gallon of regular unleaded gasoline in the United States from January 2009 to December 2010. Date …………………………………………………………………………………… Price Per Gallon Jan-09 ………………………………………………………………………………………………….

> Tourism was hit hard by the international financial crisis that began in the fall of 2008. According to the Bureau of Economic Analysis (December 20, 2010), tourism spending has picked up, but it still remains below its peak, which occurred in 2007. The

> The following table lists a portion of the percentage (share) of total shipment of music that falls in the category of country and rap/hip-hop rock music from 1990–2008. a. Plot each of the series and comment on the respective trend.

> A diet center claims that it has the most effective weight loss program in the region. Its advertisement says, “Participants in our program really lose weight.” Five clients of this program are weighed on the first day

> The U.S. housing market remains fragile despite historically low mortgage rates (AARP, July 2, 2010). Since the rate on 30-year mortgages is tied to the 10-year yield on Treasury bonds, it is important to be able to predict this yield accurately. The acc

> The Phillips curve is regarded as a reliable tool for forecasting inflation. It captures the inverse relation between the rate of unemployment and the rate of inflation; the lower the unemployment in an economy, the higher is the inflation rate. Consider

> Hiroshi Sato, an owner of a sushi restaurant in San Francisco, has been following an aggressive marketing campaign to thwart the effect of rising unemployment rates on business. He used monthly data on sales ($1,000s), advertising costs ($), and the unem

> Consider the following portion of data on y and x. a. Estimate yt = β0 + β1xt−1 + εt. b. Estimate yt = β0 + β1yt−1 + εt. c. Estimate yt = &I

> Consider the following portion of data on y and x. a. Estimate yt = β0 + β1xt−1 + εt to make a one-step-ahead forecast for period 13. b. Estimate yt = β0 + β1ytâ&#136

> Consider the following portion of data on the variable y. t ………………………………………………………………………………………………………… y 1 …………………………………………………………………………………………………… 29.32 2 ………………………………………………………………………………………………… 30.96 ⋮ ………………………………………………………………………………………………………… ⋮ 24 ………………………

> Consider the following portion of data on the response variable y and the explanatory variable x. a. Estimate yt = β0 + β1xt−1 + εt and yt = β0 + β1xt−1 +

> Refer to the previous exercise for a description of the data set. Fit an appropriate polynomial trend model along with seasonal dummies to make a forecast for November and December of 2010. Previous exercise: The following table lists a portion of the

> The following table lists a portion of the University of Michigan’s Consumer Sentiment Index. This index is normalized to have a value of 100 in 1965 and is used to record changes in consumer morale. Date ……………………………………………………………………………. Consumer Sentimen

> Suppose eight college-bound students take a mock SAT, complete a three-month test-prep course, and then take the real SAT . A portion of the data is shown in the accompanying table. a. Specify the competing hypotheses to determine whether the median sc

> Refer to the previous exercise for a description of the data set. Previous exercise: Blockbuster Inc. faced challenges by the growing online market (CNNMoney.com, March 3, 2009). Its revenue from rental stores sagged as customers increasingly got thei

> Blockbuster Inc. faced challenges by the growing online market (CNNMoney.com, March 3, 2009). Its revenue from rental stores sagged as customers increasingly got their movies through the mail or high-speed Internet connections. The following table contai

> The controller of a small construction company is attempting to forecast expenses for the next year. He collects quarterly data on expenses (in $1,000s) over the past five years, a portion of which is shown in the accompanying table. a. Estimate a line

> Refer to the previous exercise for a description of the data set. Estimate a linear trend model with seasonal dummy variables to make forecasts for the first three months of 2011. FILE Expenses. The controller Previous exercise: Consider a portion of m

> Consider a portion of monthly return data (in %) on 20-year Treasury Bonds from 2006–2010. Date ……………………………………………………………………………………………… Return Jan-06 ……………………………………………………………………………………………… 4.65 Feb-06 ……………………………………………………………………………………………… 4.73 ⋮ …………………………………

> Hybrid cars have gained popularity because of their fuel economy and the uncertainty regarding the price of gasoline. All automakers, including the Ford Motor Co., have planned to significantly expand their hybrid vehicle lineup (CNN.com, November 9, 200

> The accompanying data file contains monthly observations for 5 years. Use it to estimate (a) a linear trend model with seasonal dummies, and (b) an exponential trend model with seasonal dummies. Which of the two models has a lower MSE and MAD? Use the ap

> The accompanying data file contains monthly observations for 5 years. a. Construct the seasonal indices for the data. b. Plot the seasonally adjusted series to recommend the appropriate trend model. c. Use the trend and seasonal estimates to make fore

> The accompanying data file contains quarterly observations for 5 years. a. Plot the series and discuss its trend and seasonal components. b. Use decomposition analysis to make in-sample forecasts with the exponential trend and seasonal indices. Compute

> The accompanying data file contains monthly observations for 5 years. Calculate and interpret the seasonal indices for April and November.

> The following data are provided for two samples drawn from independent populations: W = 545, n1 = 25, and n2 = 25. Suppose the distribution of W is approximately normal. a. Calculate the mean and the standard deviation of the distribution of W. b. Spec

> The accompanying data file contains quarterly observations for 5 years. Calculate and interpret the seasonal indices for quarters 1 and 4.

> Apple Inc. has performed extremely well in the last decade. After its stock price dropping to below 90 in May 2016, it made a tremendous come back to reach about 146 by May 2017 (SeekingAlpha.com, May 1, 2017). An investor seeking to gain from the positi

> With a new chef and a creative menu, Café Venetian has witnessed a huge surge in sales. The following data show a portion of daily sales (in $) at Café Venetian in the first 100 days after the changes. Day ………………………………………………………………………………………………… Sales 1 …

> The number of cars sold in the United States in 2016 reached a record high for the seventh year in a row (CNN Money, January 4, 2017). Consider monthly total miles traveled (in billions) in the United States from January 2010 to December 2016. A portion

> Investors are always reviewing past pricing history and using it to influence their future investment decisions. On May 16, 2014, online car buying system True Car launched its initial public offering (IPO), raising $70 million in the stock offering. An

> Consider the following table, which lists a portion of the seasonally adjusted monthly unemployment rates (in %) in California from 2007–2010. Date ………………………………………………………………………………. Unemployment Rate Jan-07 …………………………………………………………………………………………………… 4.9 Feb-0

> Rapid advances in technology have had a profound impact on the United States recording industry (The New York Times, July 28, 2008). While cassette tapes gave vinyl records strong competition, they were subsequently eclipsed by the introduction of the co

> The following data are provided for two samples drawn from independent populations: W = 700, n1 = 25, and n2 = 20. Suppose the distribution of W is approximately normal. a. Calculate the mean and the standard deviation of the distribution of W. b. Spec

> The potentially deadly 2009 Swine Flu outbreak was due to a new flu strain of subtype H1N1 not previously reported in pigs. When the World Health Organization declared a pandemic, the virus continued to spread in the United States, causing illness along

> Despite the growth in digital entertainment, the nation’s 400 amusement parks have managed to hold on to visitors. A manager collects data on the number of visitors (in millions) to amusement parks in the United States. A portion of the data is shown in

> The accompanying data file contains 20 observations for t and yt. a. Plot the series along with the superimposed linear and exponential trends. Which trend model do you think describes the data well? b. Estimate a linear trend model and an exponential

> The accompanying data file contains 20 observations for t and yt. a. Plot the series along with the superimposed linear and quadratic trends. Which trend model do you think describes the data well? b. Estimate a linear trend model and a quadratic trend

> Consider the following estimated trend models. Use them to make a forecast for t = 21. a. Linear Trend: ŷ = 13.54 + 1.08t b. Quadratic Trend: ŷ = 18.28 + 0.92t – 0.012 = 1.8 + 0.09t; se = 0.01 Inly) %3D c. Exponential Trend:

> The accompanying table shows a portion of monthly data on seasonally adjusted inflation and unemployment rates in the United States from January 2009 to November 2010. a. Use the 3-period moving average and exponential smoothing with α =

> Consider the following table, which shows a portion of the closing prices of the S&P 500 Index for 21 trading days in November 2010. Date …………………………………………………………………………………………… S&P Price 1-Nov …………………………………………………………………………………………… 1184.38 2-Nov …………………………………

> According to the Census Bureau, the number of people below the poverty level has been steadily increasing (CNN, September 16, 2010). This means many families are finding themselves there for the first time. The following table shows a portion of the perc

> Refer to the previous exercise for a description of the data set. Previous exercise: Rock and roll is a form of music that evolved in the United States and quickly spread to the rest of the world. The interest in rock music, like any other genre, has

> Rock and roll is a form of music that evolved in the United States and quickly spread to the rest of the world. The interest in rock music, like any other genre, has gone through ups and downs over the years. The Recording Industry Association of America

> The following data were drawn from two independent populations. a. Specify the competing hypotheses to determine whether the median of Population 1 is greater than the median of Population 2. b. Find the unadjusted sum of ranks, W. c. The p-value for

> The accompanying data file contains 20 observations for t and yt. a. Use the 3-period moving average to make in-sample forecasts and compute the resulting MSE and MAD. b. Use the exponential smoothing method to make in-sample forecasts with α = 0.4. Co

> The accompanying data file contains 20 observations for t and yt. a. Plot the series and discuss the presence of random variations. b. Use the exponential smoothing method to make in-sample forecasts with α = 0.2. c. Compute the resulting MSE and MAD. R

> The accompanying data file contains 20 observations for t and yt. a. Construct the 5-period moving average and plot it along with the actual series. Comment on smoothing. b. Use the 5-period moving average to make in-sample forecasts and compute the re

> The accompanying data file contains 10 observations for t and yt. a. Construct the 3-period moving average and plot it along with the actual series. Comment on smoothing. b. Use the 3-period moving average to make in-sample forecasts and compute the re

> Gary Martin is a research analyst at an investment firm in Chicago. He follows the oil industry and has developed a pretty sophisticated model that forecasts an oil company’s stock price. However, given the recent strife in the Middle E

> Madelyn Davis is a research analyst for a large investment firm. She has been assigned the task of forecasting sales for Walmart Stores, Inc., for fiscal year 2011. She collects quarterly sales for Walmart Stores, Inc. (in $ millions) for the 10-year per

> Fried dough is a popular North American food associated with outdoor food stands at carnivals, amusement parks, fairs, festivals, and so on. Usually dusted with powdered sugar and drenched in oil, it is not particularly good for you but it sure is tasty!

> An investor bought 1,000 shares of Citigroup in January 2009 for $3.55 a share. She sold all of her shares in December 2009 for $3.31 a share. a. What annual rate of return did the investor earn? b. Use the CPI information from Exercise 40 to compute t

> The adjusted closing stock prices of Wendy’s/Arby’s Group, Inc., for the first three months of 2008 are presented in the following table. Assume that these adjusted closing prices are computed at the end of the month.

> Consider the following consumer price index (CPI) and producer price index (PPI) for 2006–2009. a. Use the relevant price index to deflate the data on net revenue of Citigroup, given in the previous exercise. b. Use the relevant pric

> The following data were drawn from two independent populations. a. Specify the competing hypotheses to determine whether the median of Population 1 is less than the median of Population 2. b. Find the unadjusted sum of ranks, W. c. The p-value for th

> Citigroup, Inc., is a major financial services company based in New York. It suffered huge losses during the global financial crisis and was rescued in November 2008 in a massive bailout by the U.S. government. Consider the following table, representing