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

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:

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):

Date Dow Jones S&P 500
11-Feb 10425 1387
18-Feb 10220 1346
25-Feb 9862 1333
... (continued data)

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?