Reference no: EM132093422

Using the data below which represents the rate of return of a certain company stock for 11? months, compared with the rate of return of a certain index of 500 stocks. Both are in percent. Treating the rate of return of the index as the explanatory? variable, x how do I determine the estimates of 0β0 and β1? Assuming the residuals are normally? distributed, how would I test whether a linear relation exists between the rate of return of the? index, x, and the rate of return for the company? stock, y, at the α=0.10 level of significance stating the null and alternative hypotheses and showing the P-value for the hypothesis test? If I'm assuming the residuals are normally? distributed, how do I then construct a? 90% confidence interval for the slope of the true? least-squares regression line and then determine the mean rate of return for the company stock if the rate of return of the index is 3.15%?

Month             Rates of return of the index, x             Rates of the return of the company stock, y

APR-07                           4.23                                                      3.38

MAY-07                          3.25                                                       5.09

JUN-07                          -1.78                                                       0.54

JULY-07                        -3.20                                                       2.88

AUG-07                          1.29                                                        2.69

SEP-07                           3.58                                                        7.41

OCT-07                          1.48                                                       -4.83

NOV-07                         -4.40                                                       -2.38

DEC-07                         -0.86                                                        2.37

JAN-08                          -6.12                                                       -4.27

FEB-08                          -3.48                                                       -3.77