First Quantum Minerals Ltd., a mining and metals company based in Vancouver, produces copper, gold, and nickel. It’s listed on the Toronto and London stock exchanges. The data file ch21_MCSP_Quantum contains monthly commodity prices for copper, gold, and nickel together with the share price of First Quantum. Use multiple regression to investigate the relationship
between the share price and the commodity prices of these three metals.

(a) Regress share price against the three metals’ prices in a multiple regression model. Plot residuals against predicted share price and identify an outlying data point.

(b) Calculate the leverage of this outlying point.

(c) Comment on the effect of removing this point from the analysis, but keep it in for the rest of the analysis.

(d) If you were to remove an explanatory variable based on the P-value of its regression coefficient, which variable would you choose?

(e) First Quantum’s major production is copper and nickel. Investigate the effect of removing the gold price from the analysis.

(f) Comment on how your answer to (d) compares with your answer to (e).

(g) Should the price of either copper or nickel also be removed from the regression in (e)?

(h) What regression model do you recommend for share price as a function of metal price(s)?