Essay
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 = +
Turnover +
Expense +
,where Return is the average five-year return (in %),Turnover is the annual holdings turnover (in %),Expense is the annual expense ratio (in %),and
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 attached to Expense.
C)Calculate the standard error of the estimate.If the sample mean for Return is 34.7%,what can you infer about the model's predictive power.
D)Calculate and interpret the coefficient of determination.
Correct Answer:

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a.39.75%;
b.If the expense ratio goes up...View Answer
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Correct Answer:
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b.If the expense ratio goes up...
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