Solution Found!
United Technologies versus the S&P 500 Use the results of
Chapter 5, Problem 13AYU(choose chapter or problem)
United Technologies versus the S&P 500 Use the results of Problem 17 in Section 12.3 to answer the following questions:
(a) What is the mean rate of return for United Technologies stock if the rate of return of the S&P 500 is 4.2 %?
(b) Construct a 90 % confidence interval for the mean rate of return found in part (a).
(c) Predict the rate of return on United Technologies stock if the rate of return on the S&P 500 for a randomly selected month is 4.2 %.
(d) Construct a 90% prediction interval for the rate of return found in part (c).
(e) Explain why the predicted rates of return found in parts (a) and (c) are the same, yet the intervals constructed in parts (b) and (d) are different.
Questions & Answers
QUESTION:
United Technologies versus the S&P 500 Use the results of Problem 17 in Section 12.3 to answer the following questions:
(a) What is the mean rate of return for United Technologies stock if the rate of return of the S&P 500 is 4.2 %?
(b) Construct a 90 % confidence interval for the mean rate of return found in part (a).
(c) Predict the rate of return on United Technologies stock if the rate of return on the S&P 500 for a randomly selected month is 4.2 %.
(d) Construct a 90% prediction interval for the rate of return found in part (c).
(e) Explain why the predicted rates of return found in parts (a) and (c) are the same, yet the intervals constructed in parts (b) and (d) are different.
ANSWER:Step 1 of 6
a) The mean rate of return for United Technologies stock if the rate of return of the S&P 500 is 4.2% . By using excel we need to calculate the least square regression line and the steps are given below.
Enter the given data in excel sheet.
Go to data tool
select data analysis
then chose regression.
Enter the input range in y and x and enter output range. Then select residual.
Finally press ok.