Apply quantitative tools in financial markets.
Quantitative Finance and Financial Markets Assignment
Learning Outcome 1: Apply quantitative tools in financial markets.
Learning Outcome 2. Critically evaluate the impact of changes to financial models.
Learning Outcome 3. Compute basic valuation analysis for financial markets instruments.
Learning Outcome 4. Evaluation of the inputs variables and their outputs in the use of quantitative tools in financial markets.
Learning Outcome 5. Critically evaluate the relative importance of the key elements in successful performance measurement and control.
Problem 1 During the recession that began in 2008, not only did some people stop making house payments, but they also stopped making payments for local government services such as trash collection and water and sewer services. The following data has been collected by an accountant who is performing an audit of account balances for a major city billing department. The population from which the data was collected represents those accounts for which the customer had indicated the balance was incorrect. The dependent variable, y, is the actual account balance as verified by the accountant. The independent variable, x, is the computer-generated account balance.
|
X |
Y |
|
$4,300.00 |
3900 + NM |
|
$100.00 |
200 + NM |
|
$300.00 |
300 + NM |
|
$900.00 |
900 + NM |
|
$1,400.00 |
1400 + NM |
|
$1,900.00 |
1600 + NM |
|
$1,600.00 |
1300 + NM |
|
$3,700.00 |
3000 + NM |
|
$6,400.00 |
5100 + NM |
|
$2,100.00 |
1900 + NM |
|
$200.00 |
300 + NM |
Where NM is the last two digits of your student ID number.
a. Compute the least squares regression equation.
b. If the computer-generated account balance was 120, what would you expect to be the actual account balance as verified by the accountant?
c. The computer-generated balance for Oliver Buxton is listed as 100 in the computer-generated account record. Calculate a 95% interval estimate for Mr Buxton`s actual account balance.