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Chapter 14: Q. 14.22 (page 561)

14.22 Tax Efficiency. Tax efficiency is a measure ranging from 0 to 100 - of how much tax due to capital gains stock or mutual funds investors pay on their investments each year, the higher the tax efficiency, the lower the tax. The paper "At the Mercy of the Manager" (Financial Planning, Vol. 30(5), pp. 54-56 ) by C. Israelsen examined the relationship between investments in mutual fund portfolios and their associated tax efficiencies. The following table shows the percentage of investments in energy securities (x)and tax efficiency (y)for 10 mutual fund portfolios.

Short Answer

Expert verified

The assumptions for regression inferences are visually displayed in the picture above, and they appear to be met.

Step by step solution

01

Given Information

Given table:

For regression by the variables under investigation, find the meeting assumptions 1-3.

02

Explanation

Constants β0,β1,andσare such that each percentage investment in energy securities (x) has a normal distribution with the mean being β0+β1xand the standard deviation being σ.

Graphical representation:

Hence, the assumptions for regression inferences are visually displayed in the picture above, and they appear to be met.

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Most popular questions from this chapter

Based on a sample of data points, what is the best estimate of the population regression line?

In Exercises 14.98-14.108, use the technology of your choice to do the following tasks.
a. Decide whether you can reasonably apply the conditional mean and predicted value t-interval procedures to the data. If so, then also do parts (b)-(f)
b. Determine and interpret a point estimate for the conditional mean of the response variable corresponding to the specified value of the predictor variable.
c. Find and interpret a 95%confidence interval for the conditional mean of the response variable corresponding to the specified value of the predictor variable.
d. Determine and interpret the predicted value of the response variable corresponding to the specified value of the predictor variable.
e. Find and interpret a 95% prediction interval for the value of the response variable corresponding to the specified value of the predictor variable.
f. Compare and discuss the differences between the confidence inter. val that you obtained in part (c) and the prediction interval that you obtained in part (e).

14.99 U.S. Presidents. The data from Exercise 14.35 for the ages at inauguration and of death of the presidents of the United States are on the WeissStats site. Specified value of the predictor variable: 53 years.

Plant Emissions. Use the data on plant weight and quantity of volatile emissions from Exercise 14.25.

a. compute the standard error of the estimate and interpret your answer

b. interpret your result from part (a) if the assumptions for regression inferences hold.

c. obtain a residual plot and a normal probability plot of the residuals.

d. decide whether you can reasonably consider Assumptionsfor regression inferences to be met by the variables under consideration. (The answer here is subjective, especially in view of the extremely small sample sizes.)

In Exercises 14.12-14.21, we repeat the data and provide the sample regression equations for Exercises 4.48 -4.57.

a. Determine the standard error of the estimate.

b. Construct a residual plot.

c. Construct a normal probability plot of the residuals.

y=5-x

14.24 Custom Homes. Hanna Properties specializes in custom home resales in the Equestrian Estates, an exclusive subdivision in Phoenix, Arizona. A random sample of nine custom homes currently listed for sale provided the following information on size and price. Here, xdenotes the size, in hundreds of square feet, rounded to the nearest hundred, and ydenotes price, in thousands of dollars, rounded to the nearest thousand.
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