Some people think that the behavior of the stock market in January predicts its behavior for the rest of the year. Let the explanatory variable be the percent change in a stock market index in January. Let the response variable be the percent change in the stock market index for the entire year. You have a data set with 50 cases (where each case is a calendar year). Based on this data, you have the following statistics: mean of the x-variable: 2.75% standard devation of the x-variable: 4.48% mean of the y-variable: 8.17% standard devation of the y-variable: 22.31% correlation between the two variables: 0.655 Suppose that the mean change in January is 10.81%. What is the predicted value of the change in the stock market index for the year

Respuesta :

Answer:

1.95

Step-by-step explanation:

Formula for slope is = γ Sy/Sx

γ = Correlation, Sy = S.D. of Y value, Sx= S.D. of X value

Sy = 8.17% = 0.0817

Sx = 2.75% = 0.0275

γ = 0.655

Slope = 0.655 *(0.0817/0.0275)

Slope = 1.94595

Slope = 1.94595

Slope = 1.95

Therefore, the slope of the regression line is 1.95