An investment analyst collected data on 20 randomly chosen companies. The data consisted of the 52-week-high stock prices, PE ratio, and the market value of the company. These data are in the file titled Investment. The analyst wishes to produce a regression equation to predict the market value using the 52-week-high stock price and the PE ratio of the company. He creates a complete second-degree polynomial.
a. Construct an estimate of the regression equation using the indicated variables.
b. Determine if any of the quadratic terms are useful in predicting the average market value. Use a p-value approach with a significance level of 0.10.
c. Determine if any of the PE ratio terms are useful in predicting the average market value. Use a test statistic approach with a significance level of 0.05.