Question: Investment analysts generally believe the interest rate on bonds is

Investment analysts generally believe the interest rate on bonds is inversely related to the prime interest rate for loans; that is, bonds perform well when lending rates are down and perform poorly when interest rates are up. Can the bond rate be predicted by the prime interest rate? Use the following data to construct a least squares regression line to predict bond rates by the prime interest rate.
Bond Rate .. Prime Interest Rate
5% ....... 16%
12 ....... 6
9 ....... 8
15 ....... 4
7 ....... 7


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  • CreatedFebruary 19, 2015
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