29. Years to Maturity and Bond Yield. A sample containing years to maturity and yield (%)

CorporateBonds for 40 corporate bonds is contained in the file

a. Develop a scatter diagram of the data using x = years to maturity as the independent variable. Does a simple linear regression model appear to be appropriate?

b. Develop an estimated regression equation with x = years to maturity and x2 as the independent variables.

c. As an alternative to fitting a second-order model, fit a model using the natural logarithm of price as the independent variable; that is, yˆ 5 b0 1 b1ln(x). Does the estimated regression using the natural logarithm of x provide a better fit than the estimated regression developed in part (b)? Explain.