# Question

Results of a study reported in Financial Analysts Journal include a simple linear regression analysis of firms’ pension funding (Y) versus profitability (X). The regression coefficient of determination is reported to be r2 = 0.02. (The sample size used is 515.)

a. Would you use the regression model to predict a firm’s pension funding?

b. Does the model explain much of the variation in firms’ pension funding on the basis of profitability?

c. Do you believe these regression results are worth reporting? Explain.

a. Would you use the regression model to predict a firm’s pension funding?

b. Does the model explain much of the variation in firms’ pension funding on the basis of profitability?

c. Do you believe these regression results are worth reporting? Explain.

## Answer to relevant Questions

What percentage of the variation in percent growth in wealth is explained by the regression in problem 10–11? In problem An article in the Journal of Monetary Economics assesses the relationship between percentage growth ...Find r2 for the regression in problem 10–15. In problem Inflation (%) Total Return on Stocks (%) 1 ................ –3 2 ................ 36 12.6 .............. 12 –10.3 ............... –8 0.51 ...Using the definition of the t statistic in terms of sums of squares, prove (in the context of simple linear regression) that t2 = F. For problem 10–72, give a 99% prediction interval for wealth growth when the income quartile is 5. In problem Regress Y against X with the following data from a random sample of 15 observations: X Y 12 .............. 100 4 ............... 60 10 .............. 96 15 .............. 102 6 ............... 68 4 ...Post your question

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