Multiple linear regression

Step1: Define the variables

Y=commercial effectiveness, X1=assessed sincerity, X2=ass excitement,

X3=ass ruggedness, X4=ass sophistication
Step2: theoretically correlating them
Variables can be theoretically associated, commercial effectiveness can be
correlated with the other factors as X1=assessed sincerity, X2=ass excitement,
X3=ass ruggedness, X4=ass sophistication
Regressor variables X1, X2, X3, X4,
Based on the correlation analysis we found that adjusted Rsqaure is 0.9183,
which is high degree of correlation.
Step3: Model built

Y=B0+B1X1+B2X2+B3X3+B4X4+€
Step4: Assumptions
i. Linearity, Y, X1,X2,X3 and X4 are linearly related
ii. E(€ )=0
iii. € are uncorrelated
iv. € follows normal distribution
v. Variance of € = sigma^2 is constant(assumption of homoscedasticity)
vi. All regressor variables are independent
Step5:Final model under the assumptions
E(Y|X)= Y=B0^+B1^X1+B2^X2+B3^X3+B4X4
Step 6: Using the method of least squares the model will be built
Adjusted Rsquare from the excel sheet, (highly significant variation, more than
50%)
Step7: Model built is
Y^=B0+B1Si+B2Ex+B3Ru+B4So , where B0,B1,B2,B3,B4 are obtained from b
row of excel sheet(first row)
Step8: Interpretation of B coefficients
From the equation, define B0^, B1^, B2^, B3^, B4^.
 B0^: when all the regressor variables are negligible level, the average value of commercial
effectiveness is at a level of -36.494

B1^: For every unit change in assessed sincerity, there will be 9.825 unit of change in commercial
effectiveness. Where all other regresson variable are at constant

B2^:

Step9: Testing the significance of the model

From the anova table note F0(34.728) and P value , since the P value is 0.00001. Model is
significant
Step10: Testing the significance of individual regression coefficients
H0: B0=0
H1:B0≠0
Since P value for B0 is greater than α, B0 is insignificant

H0:B1=0
H1:B1≠0
Since P value for B1 is greater than α, B1 is insignificant

H0:B2=0
H1:B2≠0
Since P value for B2 is lesser than α, B2 is significant and it continues……….
B0, B2 are retained as they are significant

Step11: Rebuilding the model (B2 are retained as they are significant, P value is lesser than alpha)
Y^=B0+B2^X2

Step 12: Testing the assumptions

i. Linearity: high value of Rsquare = 0.9183 , and most of the scattered plot is close to
straight line hence the linearity is satisfied
ii. E(€)=0, since the average of error in (residual page of excel sheet) is very negligible this
is proved
iii. € are uncorrelated
D=
N=
K=1
dL= (table) -> 4-dL
 dU=(table) -> 4-dU
dU<d<4-dU
Hence € are uncorrelated

iv. Assumption of normality

Normal plot (most points are close to the straight line)

v. Assumption of constant variance (residual plot)

vi. All the regressors are independent:
VIF= 1.01<5, the assumption is satisfied