You may use Microsoft Excel or any other technology to complete the question as long as the explanation is clear and a screen shot is
included.
Please complete the following problems:
1. Open the Chapter 4 Webfile BeachFrontHotels.xlsx. Resorts and Spas published its Reader’s Choice List of the top 20 independent
beachfront boutique hotels in the world. The data shown are the scores received by these hotels. Each score represents the percentage
of respondents who rated a hotel as excellent or very good on one of three criteria (comfort, amenities, and in-house dining). An
overall score was also reported and used to rank the hotels.
a. Determine the estimated multiple linear regression equation that can be used to predict the overall score given the scores for
comfort, amenities and in-house dining.
b. Use the F test to determine the overall significance of the regression relationship. What is the conclusion for each test at
the 0.01 level of significance?
c. Use the t test to determine the overall significance of each independent variable. What is the conclusion for each test at the
0.01 level of significance?
d. Remove all independent variables that are not significant at the 0.01 level of significance from the estimated regression
equation. What is your recommended estimate regression equation?
2. Open the Chapter 4 Webfile RentMortgage.xlsx to complete this question. In 2011, home prices and mortgage rates fell so far that in
a number of cities the monthly cost of owning a home was less expensive than renting. The following data show the average asking rent
for ten markets and the monthly mortgage on the median priced home for 10 cities where the average monthly mortgage payment was less
than the average asking rent.
a. Develop a scatter chart for these data, treating the average asking rent as the independent variable. Does a simple linear
regression model appear to be appropriate?
b. Use a simple linear regression model to develop an estimated regression equation to predict the monthly mortgage on the median
priced home given the average asking rent. Construct a plot of the residuals against the independent variable rent. Based on this
residual plot, does a simple linear regression model appear to be appropriate?
c. Using a quadratic regression model, develop an estimated regression equation to predict the monthly mortgage on the median-
priced home, given the asking rent.
d. Do you prefer the estimated regression equation in part a or part c? Create a plot of the linear and quadratic regression lines
overlaid on the scatter chart of the monthly mortgage on the median-priced home and the average asking rent to help you assess the two
regression equations. Explain your conclusions.
3. Open the Chapter 5 Webfile TripleABond.xlsx. The corporate triple A bond interest rates for 12 consecutive months are given in the
file.
a. Construct a time series plot. What type of pattern exists in the data?
b. Develop 3-month and 4-month averages for this data. Does the 3-month or 4-month moving average provide the better forecasts
based on MSE? Explain.
c. What is the moving average forecast for the next month?
4. Consider the following time series:
Quarter Year 1 Year 2 Year 3
1 71 68 62
2 49 41 51
3 58 60 53
4 78 81 72
a. Construct a time-series plot. What type of pattern exists in the data? Is there an indication of a seasonal patter?
b. Use multiple linear regression model with dummy variables as follows to develop an equation to account for seasonal effects in
the data. Qtr1 = 1 if quarter 1, 0 else; Qtr2 = 1 if quarter 2, 0 else; Qtr3 = 1 if quarter 3, 0 else.
c. Compute the quarterly forecasts for next year.
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