# Question: Refer to Exercise 8 hedge fund returns and administrator compensation

Refer to Exercise 8 (hedge fund returns and administrator compensation), where the least squares line is ˆy = 2.2 .55x.

a. Report the SSE and syx values.

b. One of the properties of the least squares line is that it minimizes SSE and syx - two measures of error. Suppose instead of fitting the least squares line, you had fit the line ˆy = 1.5 .5x to the data. Compute SSE and syx for this line and compare it to the SSE and syx values you computed in part a.

c. Suppose now you had fit the line ˆy = - 8.5 + 1.0x to the data. Compute SSE and syx for this line and compare it to the SSE values you computed in parts a and b.

a. Report the SSE and syx values.

b. One of the properties of the least squares line is that it minimizes SSE and syx - two measures of error. Suppose instead of fitting the least squares line, you had fit the line ˆy = 1.5 .5x to the data. Compute SSE and syx for this line and compare it to the SSE and syx values you computed in part a.

c. Suppose now you had fit the line ˆy = - 8.5 + 1.0x to the data. Compute SSE and syx for this line and compare it to the SSE values you computed in parts a and b.

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