JANICE M.

GASPAR

Final Exam: Sec C

Part I:
1. Regression analysis is a form of statistical test which assesses whether one or more predictor
variables explain a single dependent variable. It follows three key assumptions. The first
assumption is that the relationship between the independent and dependent variables must be
linear. Linearity among variables can be tested using scatter plot. Secondly, regression analysis
should have variables that are normally distributed and multivariate. This assumption can be
verified by using histogram or a normal Q-Q plot. This is done to determine whether to use a
linear model, if the data are normally distributed or to use non-linear transformation if otherwise.
Lastly, regression analysis assumes that there is little or no multicollinearity among the data.
Multicollinearity occurs when the independent variables are too highly correlated with each
other. This assumption can be tested using variance Inflation factor or VIF. If the VIF is greater
than 10, there is an indication that multicollinearity may be present. Checking these assumption
aims to increase the effectiveness and appropriateness of the regression analysis.

2. Transformation in regression is important because it presents an alternative statistical

procedure to be used if the variables are non-normal.

3. In regression analysis, independent variables that correlate with Y but are very far away from
the regression line are called significant outliers. An outlier is an observed data point that has a
dependent variable value that is very different to the value predicted by the regression equation.
As such, an outlier will be a point on a scatter plot that is vertically far away from the regression
line indicating that it has a large residual. The problem with outliers is that they can have a
negative effect on the regression analysis such as reducing the fit of the regression equation,
which is used to predict the value of the dependent variable based on the independent variable.

5. Each data regression model for data over are modeled depending only on contemporaneous
values of the independent variables. Therefore, for regression concerning data over time, all of
the interactions among the variables of the model are assumed to take place immediately, or
taking frequency into account, within the same time period.

6. Change of unit from feet to inches will cause a change in the regression coefficient. The
change for that term is to be 1/12 of its magnitude when the term is in feet. The other regression
coefficient will remain unchanged because a linear transformation of a predictor does not change
the relationship of that predictor to the response variable, nor does it change the relationship of it
to the other predictor. Since the relationship remains unchanged, the only adjustment must be the
magnitude of the regression coefficient of the predictor for which there is a scalar change.

1|Page Region’s Premier University of Choice

Part II:

2|Page Region’s Premier University of Choice

3|Page Region’s Premier University of Choice
4|Page Region’s Premier University of Choice
5|Page Region’s Premier University of Choice
6|Page Region’s Premier University of Choice
7|Page Region’s Premier University of Choice
This model has a coefficient of determination, �2 of 0.962 which means that the predictor
variables explain 96.2% percent of the variability of the dependent variable. Also, this model
produced high R-value of 0.981 which indicates a good level of prediction. The model is also
statistically significant to predict the dependent variable, F(4, 27) = 171.713, p < 0.005. This
means that the regression model is a good fit of the data. Furthermore, it shows that the
unstandardized coefficients of each predictor are statistically significantly different from zero
aside from the predictor variable Crude Oil Vapor Pressure. In general, all variables statistically
predicted Gas Yield, and that after accounting for other variables, a higher crude oil vapor
pressure will yield Gasoline per Crude Oil percentage.

8|Page Region’s Premier University of Choice