The data in the following table show the number of shares selling (millions) and the expected price (average of projected low price and projected high price) for 10 selected initial public stock offerings.
Company Shares Price
American Physician 5 15
Apex Silver Mines 9 14
Dan River 6.7 15
Franchise Mortgage 8.75 17
Gene Logic 3 11
International Home Foods 13.6 19
PRT Group 4.6 13
Rayovac 6.7 14
RealNetworks 3 10
Software AG Systems 7.7 13
a. Develop an estimated regression equation with the number of shares selling as the independent variable and the expected price as the dependent variable.
b. At the .05 level of significance, is there a significant relationship between the two variables?
c. Did the estimated regression equation provide a good fit? Explain.
d. Use the estimated regression equation to estimate the expected price for a firm considering an initial public offering of 6 million shares.