# (c) Assuming the residuals are normally distributed, construct a 90% confidence interval for the slope of the true least-squares regression line.(Round to four decimal places as needed.)Lower bound:Upper bound(Round to four decimal places as needed.)(d) What is the mean rate of return for the company stock if the rate of return of the index is 3.25%?%.The mean rate of return for the company stock if the rate of return of the index is 3.25% is(Round to three decimal places as needed.)Click to select your answer(s).

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Step 1

Note:

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Step 2

Part (a):

In order to obtain the least square regression line, first perform regression analysis on the data.

The regression analysis is conducted here by using EXCEL. The software procedure is given below:

• Enter the data.
• Select Data > Data Analysis > Regression> OK.
• Enter Input Y Range as \$B\$1:\$B\$12.
• Enter Input X Range as \$A\$1:\$A\$12.
• Click OK.

The output using EXCEL is as follows:

Step 3

Part (b):

The aim of the test is to find whether there a linear relationship exist between rate of return of index and rate of return of the company stock.

The null hypothesis of the form:

H0: β1 = 0, that is there is no linear relationship exist between rate of return of index and rate of return of the company stock.

The alternative hypothesis is of the form:

H1: β1 ≠ 0, that is there is a linear relationship exists between rate of return of index and rate of return of the company stock.

Correct option is Option A.

Decision based on p-value:

At level of significance α, if the p-value ≤ α, then reject the null hypothesis, H0. Otherwise fail to reject H0.

From Part (a) outputs, t = 2.6694 and p-value =0.026.

Conclusion:

Here, p-value is...

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