Unlisted plc hopes to achieve a Stock Market quotation for its shares. A profit forecast is necessary and, in order to achieve such a forecast,...

Unlisted plc hopes to achieve a Stock Market quotation for its shares. A profit forecast is necessary and, in order to achieve such a forecast, the company has experimented with a number of approaches. The following are details from a linear regression on the last 11 years profit figures:
x = years (expressed 1 to 11)
y = annual profit figures

You are required:
a) To obtain the simple least squares regression line of Y on X;
b) To use the line to estimate profit in each of the next two years;
c) To calculate the coefficient of determination for the line and to explain its meaning;
d) To calculate the standard error of the regression line and to use this to obtain the 95% confidence
interval for the line;
e) On the basis of the information given on your answer (a) to (d) to determine whether it is likely that the regression line will be a good estimator of profit.

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Mutiso answered the question on December 14, 2018 at 14:07

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