Math Problem Statement

Price = 28.9367 + 2.4050 dividend Reject H0 if t is not between ± 2.048 . The test statistic is 7.3271 . R2 0.6572 Correlation coefficient 0.8107 What is the 95% prediction interval of price per share if the dividend is $10? (Round your answers to 4 decimal places.) [ , ]

What is the 95% prediction interval of price per share if the dividend is $10? (Round your answers to 4 decimal places.)

Solution

To compute the 95% prediction interval for the price per share when the dividend is $10, we can follow these steps based on the provided information:

Step 1: Use the Regression Equation

The regression equation is given as:

Price=28.9367+2.4050×Dividend\text{Price} = 28.9367 + 2.4050 \times \text{Dividend}

Substitute Dividend=10\text{Dividend} = 10 into the equation to find the predicted price:

Price=28.9367+2.4050×10=28.9367+24.05=52.9867\text{Price} = 28.9367 + 2.4050 \times 10 = 28.9367 + 24.05 = 52.9867

Step 2: Calculate the Standard Error for Prediction

We will calculate the prediction interval. For this, we use the formula for the prediction interval:

Prediction Interval=y^±tα/2SEprediction\text{Prediction Interval} = \hat{y} \pm t_{\alpha/2} \cdot SE_{\text{prediction}}

Where:

  • y^\hat{y} is the predicted value (52.9867),
  • tα/2t_{\alpha/2} is the critical value from the t-distribution (2.048 given),
  • SEpredictionSE_{\text{prediction}} is the standard error of the prediction.

We need to calculate the standard error SEpredictionSE_{\text{prediction}} first. Since specific information about the standard error or residual variance isn't provided in your data, I will proceed assuming you have access to it, or it's calculable from additional data.

Do you have the standard error of the regression (or standard error of estimate) available? If not, we can only complete the interval once that information is known.

Let me know if you need further clarification or details on how to proceed!

Ask a new question for Free

By Image

Drop file here or Click Here to upload

Math Problem Analysis

Mathematical Concepts

Regression Analysis
Prediction Interval
Statistics

Formulas

Price = 28.9367 + 2.4050 * Dividend
Prediction Interval = ŷ ± t * SE(prediction)

Theorems

Prediction Interval Theorem

Suitable Grade Level

Undergraduate Level Statistics