FE5056QA Compute the coefficient of Determination? Would you recommend the regression model for the purpose of estimation?

Problem Solving - Methods and Analysis

Instruction:

There are 2 parts (both mandatory) as below:

1. Prepare a research proposal as per the given guidelines
2. Perform data analysis and report your results as per the given guidelines

Content: relevance, focus, and coverage

Reading and Research: demonstration of independent reading that includes scholarly refereed journal articles and use of a range of sources Format, Structure, and/or Use of relevant tables, graphs, and data: clear, neat, within word limits, logic

Quality of argument: evidence of understanding, judgment, originality, logic, and synthesis, critical thinking, analysis, and exposition Quality of communication: language and clarity; bibliography and referencing; Harvard referencing system.

Part 1: Research proposal It should include the following sub-headings:

Title:

This should represent the content of your proposal.

Research topic:

Briefly explain your research topic and its relevance. It may be a problem requiring a solution, a question needing an answer, or a theory needing further development.

Literature review:

Discuss relevant literature and reference them (in Harvard format). Include a minimum of 5 references. Explain how your topic fits into the debate and contributes to existing literature.

Proposed data type and collection techniques:

Explain if you plan to use primary or secondary data. Elaborate on the data source and proposed collection techniques.

Proposed methodology:

Explain your research design, methodology, and rationale for your approach.

Part 2: Data analysis

Using any data analysis tool, examine the case-study and address the questions below:

The Dow Jones Industrial Average (DJIA) and the Standard & Poor`s (S&P) 500 Index are both used as measures of overall movement in the stock market. The DJIA is based on the price movements of 30 large companies; the S&P 500 is an index composed of 500 stocks. Some argue the S&P 500 is a better measure because it is broader. The closing price for DJIA and S&P 500 for 10 weeks, starting February 11, 2000, are shown (Barron`s, April 17, 2000):

Question 1: Develop a scatter diagram for these data and interpret it.

Question 2: Compute the sample correlation coefficient.

Question 3: Assess if they are poorly correlated or closely associated.

Question 4: Develop the least squares estimated regression equation.

Question 5: Compute the coefficient of determination. Would you recommend the regression model for estimation purposes?