The purpose of this assignment is for you to analyze Exercise.XLS data through the regression analysis. You need to use the data as following. Please refer to the first assignment for the description of the data.
1. The regression model you consider is given by WTEi = β0 + β1 Sizei + β2 Revenuei + β3 Yearsi + β4 Numprodi + β5 Overalli + εi
Describe what this model aims to analyze.
2. Estimate the regression model and report the outputs (i.e., the three EXCEL tables).
3. (a) Draw a line chart that compares the observed and predicted values of WTE. (b) Also, draw a line chart for the error εi’s (X axis: observation no. and Y axis: error).
4. Test whether this model is significant (i.e., whether the null hypothesis that R 2=0 can be rejected) at a 0.05 significance level.
5. Identify which coefficients are significant (i.e., whether the null hypothesis that bj=0 can be rejected) at a 0.05 significance level.