What part of the formula for R2
have you already found when calculating the equation of the least squares line?
1. You have been asked to use the spreadsheet to find the following:
● the equation of the least squares line (regression line) for value three years after purchase (Y) and value at the point of purchase (X);
● the coefficient of determination (R2) for this least squares (regression) line. You will see instructions on the spreadsheet on how to find the regression line and R2. When you have done this for the 50 company acquisitions shown on the spreadsheet, you can press the button identified and find data on another 50 company acquisitions.
2. Can you suggest how Lendright might use the analysis from the spreadsheet to inform its decision making?
Q29:
This is the earlier data from Q1 of Self-Check Questions 4.1 (p. 106) which shows how total exports Y (£000) for a firm that Lendright is considering funding varied over the years (X) from 2006 to 2013 where X = 1 is 2006, X = 2 is 2007 and so on.
(a) Find the coefficient of determination.
(b) Find Pearson’s coefficient of correlation.
(c) Comment on your results.
Q30:
This is the earlier data from Q2 of Self-Check Questions 4.1 (p. 107) which shows how employment Y (000) for a firm that Lendright is considering funding varied over the years (X) from 2004 to 2013 where X = 1 is 2004, X = 2 is 2005 and so on.
(a) Find the coefficient of determination.
(b) Find Pearson’s coefficient of correlation.
(c) Comment on your results.
Q31:
This is the earlier data from Q4 of Self-Check Questions 4.1 (p. 107) which shows the budget deficit (public expenditure minus tax revenue) as a percentage of national income for nine countries and the market value of their CDS in 2012, expressed as a percentage. We noted above that the higher the percentage CDS for a country, the greater the market perception of risk from lending to that country.
(a) Find the coefficient of determination.
(b) Find Pearson’s coefficient of correlation.
(c) Comment on your results.