Question: = a + bx for predicting T-bill return from the inflation rate? Write the formula replacing a and b by their respective numerical values. (5p)

= a + bx for predicting T-bill return from the inflation rate? Write the formula replacing a and b by their respective numerical values. (5p) f) What is the predicted return on T-bill with 3% rate of inflation? (5p) g) What amount of the variance in T-bill (y) do the inflation rate (x) account for this sample? (R2 =?) Interpret the result in the context of the data. (3p) h) What is the unexplained variation in T-bill that is not related to the inflation rate? (3p) i) Write out the null and alternative hypotheses and conduct a hypot

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 = a + bx for predicting T-bill return from the inflation

Year 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TBILL 3.01 3.81 3.20 2.59 2.90 3.26 3.68 4.05 5.06 4.61 5.47 6.86 6.51 4.52 4.47 7.20 7.95 6.10 5.26 5.52 7.58 10.04 11.32 13.81 11.06 8.74 9.78 7.65 6.02 6.03 6.91 8.03 7.46 5.44 3.54 3.12 4.64 5.56 5.08 5.18 4.83 4.75 5.90 3.34 1.68 1.05 1.58 3.39 4.81 4.44 1.62 0.28 0.20 0.10 0.13 0.09 0.06 0.16 0.46 1.05 INFLATION 1.76 1.73 1.36 0.67 1.33 1.64 0.97 1.92 3.46 3.04 4.72 6.20 5.57 3.27 3.41 8.71 12.34 6.94 4.86 6.70 9.02 13.20 12.50 8.92 3.83 3.79 3.95 3.80 1.10 4.43 4.42 4.65 6.11 3.06 2.90 2.75 2.67 2.54 3.32 1.70 1.61 2.68 3.39 1.55 2.38 1.88 3.26 3.42 2.54 4.08 0.09 2.73 1.50 2.96 1.74 1.50 0.76 0.73 2.07 2.11 Year 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TBILL 3.01 3.81 3.20 2.59 2.90 3.26 3.68 4.05 5.06 4.61 5.47 6.86 6.51 4.52 4.47 7.20 7.95 6.10 5.26 5.52 7.58 10.04 11.32 13.81 11.06 8.74 9.78 7.65 6.02 6.03 6.91 8.03 7.46 5.44 3.54 3.12 4.64 5.56 5.08 5.18 4.83 4.75 5.90 3.34 1.68 1.05 1.58 3.39 4.81 4.44 1.62 0.28 0.20 0.10 0.13 0.09 0.06 0.16 0.46 1.05 INFLATION 1.76 1.73 1.36 0.67 1.33 1.64 0.97 1.92 3.46 3.04 4.72 6.20 5.57 3.27 3.41 8.71 12.34 6.94 4.86 6.70 9.02 13.20 12.50 8.92 3.83 3.79 3.95 3.80 1.10 4.43 4.42 4.65 6.11 3.06 2.90 2.75 2.67 2.54 3.32 1.70 1.61 2.68 3.39 1.55 2.38 1.88 3.26 3.42 2.54 4.08 0.09 2.73 1.50 2.96 1.74 1.50 0.76 0.73 2.07 2.11

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