Posted by **David** on Monday, August 20, 2012 at 11:53am.

Question 3

Investment analysts generally believe the interest rate on bonds is inversely related to the prime

interest rate for loans; that is, bonds perform well when lending rates are down and perform poorly

when interest rates are up. Can the bond rate be predicted by the prime interest rate?

Use the following data to

construct a scatter graph and then fit a regression line to the data.

Report the regression formula and the r-squared value from the chart (right click on the line, select

“Add Trendline” and select options to show these metrics).

Bond Rate/ Prime Interest Rate

5% 16%

12 6

9 8

15 4

7 7

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