In 1990, Business Week magazine compiled financial data on the 1,000 companies that had the biggest impact on the U.S. economy. Data from this compilation were presented in Problem 13 of Chapter 8. In addition to the company name, data on the following variables were shown in that problem:
1990 Rank: Based on company's market value (share price on March 16, 1990, multiplied by available common shares outstanding)
1989 Rank: Rank in 1989 compilation
P-E Ratio: Price-to-earnings ratio, based on 1989 earnings and March 16, 1990, share price
Yield: Annual dividend rate as a percentage of March 16, 1990, share price
The computer output given next is based on the Business Week magazine data. Use the output to answer the following questions:
a. Fit a model with yield (Y) as the response and 1990 rank (X1), 1989 rank (X2), and P-E ratio (X3) as the predictors. State the estimated model.
b. Perform variables-added-last tests for each predictor.
c. Does there appear to be any problem with collinearity? Explain.
d. Examine each plot of studentized residuals versus the predictor. Are any violations of linear regression assumptions obvious?
e. Determine residuals and leverage values. Do any observations seem bothersome? Explain.