#11 Pg. 165 Q. 4 The regression result is Ŷ =2.5 + 1.93X If the travel distance (X) increases by 8 km why is 2.5 not added in the calculation of the increased travel time (Ŷ)? Because in the example on page 148 when calculating excess return of WPO against the excess return of -7.8% in S&P 500 in this working -2.3% is added to calculate Ŷ (WPO). Using the same logic my answer for Q4 is 17.9 mins and not 15 mins as per their answer? There must be something I am missing, please explain. Thank you.
I don’t have Schweser, but if you are just measuring the increase, and not the total, then the travel time will just increase by coefficient times X since you are measuring the relative increase in travel time not total travel time. The last term of the equation is your rate of change for a change in the independent variable.
Yes, just checked the question and Ro424 is correct.
It’s just the increase in time of an additional 8km, not the total time.
I am new in the forum. What means EOC?
End of chapter