Consider the model y = βx+ε, where the intercept of the line is known to be zero. Assume that values (x1, y1),…, (xn, yn) are observed, and the least-squares estimate is to be computed.
a. Derive the least-squares estimate in terms of xi and yi.
b. Let σ2 denote the variance of ε (which is also the variance of y). Derive the variance of the least-squares estimate, in terms of σ2 and the xi,
Key: Bold/Italic = important information, Highlighted = vital for test From 211 Elementary Statistical Methods (Psychology) ; Professor Souza Ideas Stressed in Chapter Two: Measurements often cluster...