Question

Asked Oct 21, 2019

86 views

Step 1

**Note:**

Thank you for the question. As your question has more than 3 parts, according to our policy, we are answering the first 3 parts for you. If you need help with any other particular part, please re-post the question and mention the part you need help with.

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:

*H*0: *β*1 = 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:

*H*1: *β*1 ≠ 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, *H*0. Otherwise fail to reject* H*0.

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

**Conclusion:**

Here, *p*-value is...

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