Chapter 3

The Ordinary Least Squares (OLS) Regression Model

Chapter 3 Preview

When you have completed reading this chapter you will be able to:

• Know the difference between a dependent variable and an independent variable.

• Know what portion of a regression equation (model) represents the intercept (constant) and how to interpret that value.

• Know what part of the regression equation represents the slope and how to interpret that value.

• Know that for business applications the slope is the most important part of a regression equation.

• Know the ordinary least squares (OLS) criterion for the “best” regression line.

• Know four of the basic statistical assumptions underlying regression analysis.

• Know how to perform regression analysis ...

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