Product quality and financial performance

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Many variables influence the price of a company& 39;s common stock, including company-specific internal variables such as product quality and financial performance, and external market variables such as interest rates and stock market performance. The table on page 576 contains quarterly data on three such external variables (x1, x2, x3) and the price y of Ford Motor Company's Common stock (adjusted for a stock split). The Japanese Yen Exchange Rate (the value of a U.S. dollar expressed in yen), x1, measures the strength of the yen versus the U.S. dollar. The higher the rate, the cheaper are Japanese imports-such as the automobiles of Toyota, Nissan, Honda, and Subaru-to US. consumers. Similarly, the higher the deutsche mark exchange rate, x2, the less expensive are BMW's and Mercedes Benz's to U.S. consumers. The S&P 500 Index, x3, is a general measure of the performance of the market for stocks in U.S. firms

b. Find the standard deviation of the regression model and interpret its value in the context of this problem.

c. Do the data provide sufficient evidence to conclude that the price of Ford stock decreases as the yen rate increases? Report the observed significance level and reach a conclusion using α = .05.

d. Interpret the value of  in terms of these data. Remember that your interpretation must recognize the presence of the other variables in the model.

Reference no: EM131111161

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