[Type the company name] | Assignment2 | 17110292 | Faiza Tahir | | [Pick the date] |

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a. Use excel to estimate the parameters of this model using i. Formulas [as in example_regression.xls file on lms] [10] ii. Solver [10] iii. Regression tool in Data Analysis [10]
b. Use stata to answer questions in this part. i. Estimate the regression model and write the equation of the best fit line. * volatility=53.28629 + (-0.3970438)Cratings + error [10] ii. Plot the all the data on a scattergram, then sketch the least squares line. [10]

iii. Do the data provide sufficient evidence to conclude that country credit rating contributes information for the prediction of market volatility? Use α=0.05.
Ho; β1=0 Ha; β1 ≠0 T statistic for Crating as shown in stata is 17.69. T α/2 at α = 0.05 is 2.045 . we reject null hypothesis if and only if t > t α/2 as 17.69 is greater than 2.045 so β ≠0 which means Cratings is significant in predicting market volatility. Moreover, the p value is also 0 < 0.05 which implies that C ratings contributes significantly in the prediction of market volatility. as per the regression model above , the 95% confidence interval does not include 0 which explains that the relationship between volatility and cratings is significant. R sq which is the measure of goodness of a model implies that model is reliable as value of r-sq is closer than 1. [10] iv. Compute the proportion of developed countries (D) in the sample.
Proportion of