SESSION:14 Regression Analysis in FinanceVideo Activity

Session:14 Regression Analysis in Finance

Video Activity

Principles of Finance | Leadership Development – Micro-Learning Session

Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-finance

Simple Linear Regression

1 . Based on the scatter plot shown, will the correlation coefficient be a positive value or negative value? Would you estimate that the correlation is significant for the relationship between radio ads and revenue?

2 . For the linear regression model for ads versus revenue, the slope is shown as 78.075. How would this slope be interpreted (that is, provide a verbal description for the meaning of the slope of 78.075)?

How to Calculate Correlation for Stocks, Bonds, and Funds

3 . Based on the presentation shown in the video, is the FTSE 100 index correlated with the value of sterling? Or are the two measures uncorrelated? What data leads to your conclusion?

4 . Based on the presentation in the video, is there a correlation between stock funds and bond funds? Why is this information important to an investor trying to design a portfolio?