Assignment on regression 4-5 pages, APA
Question Description
Please answer 4 questions
- Please explain what a binomial distribution is. What is the symmetry property of this distribution? How do you find the mean, the variance and the standard deviation of this distribution? Provide a simple example of binomial distribution.
- See attached spreadsheet (problem and calculations are provided for solution)
- Explain the sign nonparametric test. What is the objective of this test and how the corresponding hypotheses are formulated? What is the approach to test the hypotheses using the binomial distribution for both non-directional and directional cases?
- A survey of 40 home prices in a metropolitan area has the following results.
|
Price |
Less than $200,000 |
Equal to $200,000 |
More than $200,000 |
|
Number of homes |
13 |
1 |
27 |
- Test the hypothesis that the median price in the metropolitan is $200,000
- Test the hypothesis that the median price in the metropolitan is more than $200,000
ɑ = 0.05 in both cases. Include hypothesis formulation, use the binomial approach, and explain your calculations in detail. Include p values in both cases.
- It can be conjectured that the annual return a security and the market return are related by the following regression model
y = mx + b + ε
Where y is the annual return of the security, x is the annual return of the market, b is the intercept, Ɛ is the normally distributed noise, and
Return = value at end of the year + received dividends during the year – value at the beginning of the year.
Test this model by retrieving annual data on a security of your choice. Choose a financial index such as S&P 500 as the indicator of the market, and retrieve the data. Use the most recent 20 years as the time span of the data. Perform regression analysis and make sure to include the hypothesis in your study. Provide your results and write your conclusions. Include all relevant information and conclusions, significances, the final regression model, coefficient of determination, graph of the regression line accompanied in the scatterplot, extent of residuals, and normality of residuals. Does the model seem to be valid according to your study? If so, is the influence positive or adverse? If you conclude influence, then your regression model indicates outperformance or underperformance of the market? Explain all your work in detail.
