Finance Calculator
HP 10BII


Regression

To perform a Linear Regression analysis, a second  variable needs to be added.   In this case, the yearly return on Stock J. To enter x,y pairs of data, begin by clearing the contents of blue key 4 through blue key 9 by pressing orange key (fourth row third column). Enter the first x variable and press INPUT. Enter the first y variable and press key. The screen should read 1 indicating one pair of variable has been entered. Continue these steps until all variables have been entered.

     Year                   Return on Stock J  (Y variable)                      Market Return (X variable)
       1                          38.6%                                                                  23.8%
       2                         24.7+/-                                                                  7.2+/-
       3                          12.3                                                                      6.6
       4                            8.2                                                                      20.5
       5                          40.1                                                                      30.6

To perform two variable statistical analysis on this set of numbers, the commands explained in section X can be used. To find the regression variables:


Plugging these figures into the linear equation Y = a + bX we get Y = -8.922 + 1.603X, which can be used to predict a Y variable given the X variable and an X variable given a Y variable.  This can be done manually or the HP 10BII will compute for you.

To estimate Y for a given X, enter the x-value and press orange key,

Suppose the market is predicted to have a 10% return the following year.  Enter this as the X variable. The screen should display Y = 7.1089.  This would be the return on stock J if the predicted market return was correct. 

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Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu