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 (or 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 in Excel.

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