# Question: As the nature of investing shifted in the 1990s more

As the nature of investing shifted in the 1990s (more day traders and faster flow of information using technology), the relationship between mutual fund monthly performance (Return) in percent and money flowing (Flow) into mutual funds ($ million) shifted. Using only the values for the 1990s (we’ll examine later years in later chapters), answer the following questions. (You may assume that the assumptions and conditions for regression are met.) The least squares linear regression is:

Flow — 9747 + 771 Return.

a) Interpret the intercept in the linear model.

b) Interpret the slope in the linear model.

c) What is the predicted fund Flow for a month that had a market Return of 0%?

d) If during this month, the recorded fund Flow was $5 billion, what is the residual using this linear model? Did the model provide an underestimate or overestimate for this month?

Flow — 9747 + 771 Return.

a) Interpret the intercept in the linear model.

b) Interpret the slope in the linear model.

c) What is the predicted fund Flow for a month that had a market Return of 0%?

d) If during this month, the recorded fund Flow was $5 billion, what is the residual using this linear model? Did the model provide an underestimate or overestimate for this month?

## Answer to relevant Questions

An online clothing retailer examined their transactional database to see if total yearly Purchases ($) were related to customers’ Incomes ($). (You may assume that the assumptions and conditions for regression are ...If you create a regression model for predicting the sales ($ million) from money spent on advertising the prior month ($ thousand), is the slope most likely to be closer to 0.03, 300, or 3000? Explain. A business student needs cash, so he decides to sell his car. The car is a valuable BMW 850CSi that was only made over the course of a few years in the 1990s. He would like to sell it on his own, rather than through a dealer ...True or False. If False, explain briefly. a) We choose the linear model that passes through the most data points on the scatterplot. b) The residuals are the observed y-values minus the j'-values predicted by the linear ...According to U.S. Census data, 68% of the civilian U.S. labor force self-identifies as White, 11% as Black, and the remaining 21% as Hispanic/Latino or Other. Among Whites in the labor force, 54% are Male, and 46% Female. ...Post your question