Question: Refer to Exercise 8 (hedge fund returns and administrator compensation), where the least squares line is y = 2.2 .55x. a. Report the SSE and

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

a. Report the SSE and s_yx values.

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

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

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