2.

Fit the indicated multiple regressions model and show the Summary of Model

fit, ANOVA Table and the Parameter Estimates table. Interpret the
regression output from all these tables.
A. The Summary of Model fit, ANOVA Table and the Parameter Estimates table
have been shown below:

Interpretation of Summary of Fit:

As we can see that RSquare=0.216 and RSquare Adj=0.211
Rsquare=21.6% shows the approximately 21% of total variation in Apple return can be
explained by variation in Whole Market Return and IBM Return
Since RSquare Adj< RSquare, this shows that adding two explanatory variables (Whole
Market Return and IBM Return) has resulted in some penalty and increased the
complication of the model.
Interpretation of Analysis of Variance Table (ANOVA Table):
SSR (Sum of squared Regression) =1.443
SSE (Sum of squared Errors) =5.218
SST (Sum of squared Totals) =6.661
Rsquare (given in Summary of fit table) = SSR/SST. It shows how goodness of fit.
F-ratio=MSR/MSE

A significant F-statistic (small p-value) is used to conclude that model explains

significant variation in the response variable. Thus, since F (=41.06) is significantly large
here, this model is able to explain the variation in the response variable-Apple return
using two explanatory variables (Whole Market Return and IBM Return)
Interpretation of Parameter estimates:

0=Intercept of the fit-line=0.0048. This represents the portion of Apple return that does
not vary with either of explanatory variables (Whole market return, IBM return)
1=Slope that represents variation of Apple return with respect to Whole market
return=1.32
2= Slope that represents variation of Apple return with respect to IBM return=0.23
We can see that P (1) < where =0.05 and 1 represents slope of variance of Apple
return with respect to the explanatory variable-Whole market return. Thus the hypothesis
that the Apple return does not vary with explanatory variable-Whole market return is
rejected since its value is less than 0.0001 (i.e. less than ).
Similarly, the p-value for IBM return comes out to be less than thus the hypothesis that
Apple return does not vary with explanatory variable-IBM return is rejected. The * in the
last column indicate this null hypothesis rejection.