Compute the measure of goodness-of-fit

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Consider the simple regression model Yt =α + βX+ uin which Yis Alphabet's stock price(in $ per share) and Xis interest rates (in % per annum ). You have daily data on stock prices and interest rates from 01 January 2010 through 22 October 2010, a total of 202 observations. The following is a partial computer output for the data:

Variable

Coefficient

Standard Error

Constant

948

87

Interest Rate

-52

23

Error Sum of Squares (ESS) 1704

Total Sum of Squares (TSS) 1842

Test individually whether the coefficients for the constant term and interest rate are significantly different from zero at the 5 percent level. Be sure to state the null and alternative hypotheses, the test statistic and its distribution, the critical value (or range), and the criterion. What is your conclusion? Compute the measure of goodness-of-fit. Compute the 90% Confidence intervals for the intercept and the slope coefficient.

Reference no: EM131909443

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