The following table gives data on gold prices, the Consumer Price Index (CPI), and the New York

Question:

The following table gives data on gold prices, the Consumer Price Index (CPI), and the New York Stock Exchange (NYSE) Index for the United States for the period 1974 €“2006. The NYSE Index includes most of the listed on the NYSE, some 1500-plus.
a. Plot in the same scattergram gold prices, CPI, and the NYSE Index.
b. An investment is supposed to be a hedge against inflation if its price and /or rate of return at least keeps pace with inflation. To test this hypothesis, suppose you decide to fit the following model, assuming the scatterplot in (a) suggests that this is appropriate:

Gold pricet = Î²₁ = + Î²₂ CPI_t + u_t

NYSE indext = Î²₁ + Î²₂ CPI_t + u_t

Gold Price CPI Year NYSE 1974 159.2600 463.5400 49.30000 1975 161.0200 483.5500 53.80000 1976 1977 124.8400 575.8500 56.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...