An investment analyst wants to examine the relationship between a mutual fund's return, its turnover rate, and its expense ratio. She randomly selects 10 mutual funds and estimates:
Return = β₀ + β₁Turnover + β₂Expense + ε, where Return is the average five-year return , Turnover is the annual holdings turnover (in %), Expense is the annual expense ratio (in %), and ε is the random error component. A portion of the regression results is shown in the accompanying table. a. Predict the return for a mutual fund that has an annual holdings turnover of 60% and an annual expense ratio of 1.5%.
B) Interpret the slope coefficient for the variable Expense.
C) Calculate the standard error of the estimate.
D) Calculate and interpret the coefficient of determination.

Question

An investment analyst wants to examine the relationship between a mutual fund's return, its turnover rate, and its expense ratio. She randomly selects 10 mutual funds and estimates:
Return = β₀ + β₁Turnover + β₂Expense + ε, where Return is the average five-year return

, Turnover is the annual holdings turnover (in %), Expense is the annual expense ratio (in %), and ε is the random error component. A portion of the regression results is shown in the accompanying table.

a. Predict the return for a mutual fund that has an annual holdings turnover of 60% and an annual expense ratio of 1.5%.
B) Interpret the slope coefficient for the variable Expense.
C) Calculate the standard error of the estimate.
D) Calculate and interpret the coefficient of determination.

Quizplus · Accepted Answer

The Answer of An investment analyst wants to examine the relationship between a mutual fund's return, its turnover rate, and its expense ratio. She randomly selects 10 mutual funds and estimates: Return = β₀ + β₁Turnover + β₂Expense + ε, where Return is the average five-year return , Turnover is the annual holdings turnover (in %), Expense is the annual expense ratio (in %), and ε is the random error component. A portion of the regression results is shown in the accompanying table. a. Predict the return for a mutual fund that has an annual holdings turnover of 60% and an annual expense ratio of 1.5%. B) Interpret the slope coefficient for the variable Expense. C) Calculate the standard error of the estimate. D) Calculate and interpret the coefficient of determination.

An Investment Analyst Wants to Examine the Relationship Between a Mutual