
Explanation:
To calculate the regression line , let be the S&P 500 index prices and be the GOOG prices.
First, calculate the means ( and ):
Next, calculate the slope Deviations for (): -7, 2, 5, 11, -11 Deviations for (): -6.4, -12.4, -1.4, 9.6, 10.6
Covariance term (Numerator):
Variance term (Denominator):
Slope
Finally, calculate the intercept :
The resulting regression equation is .
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Q.60 An analyst is performing a regression analysis on the daily prices of Google (GOOG) compared to the prices of the S&P 500 index. Below is the data that the analyst managed to collect for the last 5 trading days:
| Closing Price | GOOG | S&P |
|---|---|---|
| Dec 05, 2017 | 1,005 | 2,630 |
| Dec 04, 2017 | 999 | 2,639 |
| Dec 01, 2017 | 1,010 | 2,642 |
| Nov 30, 2017 | 1,021 | 2,648 |
| Nov 29, 2017 | 1,022 | 2,626 |
What is the equation for the regression line?
A
B
C
D
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