Rafael is analyzing data about the price of a certain stock in his finance class. He finds the linear regression line for the data to be f(x) = 0.76x + 42.39, where x is the number of days since Rafael started observing the stock's price and f(x) is the price in dollars of the stock after x days of observation. If the point (15, 52.04) is in the original data set, what is the residual for when x = 15?
Accepted Solution
A:
For this case, the first thing to do is to use the equation of the given line. We have then: f (x) = 0.76x + 42.39 We substitute the value of x = 15: f (15) = 0.76 * (15) + 42.39 f (15) = 53.79 Then, subtracting with the original value we have: 53.79-52.04 = 1.75 Answer: the residual for when x = 15 is: 1.75