# Let American investors need a certain amount of cash for maintaining their business on the current economic recession, they would like to sell their Korean stocks quickly to exchange for dollars to send back to the U.S.  Therefore the Stock price indices of Korea  decline (as the supply of stocks increases) and foreign exchange rate ( won per dollar ) increases (as they demand more dollar).

Computer Homework for Eco 156       [Due: Dec 3 ( Thurs ) ]

Foreign Exchange Rate & Stock prices in Korea.

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Let American investors need a certain amount of cash for maintaining their business on the current economic recession, they would like to sell their Korean stocks quickly to exchange for dollars to send back to the U.S.  Therefore the Stock price indices of Korea  decline (as the supply of stocks increases) and foreign exchange rate ( won per dollar ) increases (as they demand more dollar). In fact there could exist strong relationship between stock price index and foreign exchange rate.

Using the data of Kospi and exchange rate ( Korean won per dollar), and

utilizing the Excel (in computer), analyze the following things. [Your answer should be followed by the results [printout] of the Excel.]

tip: use www.yahoo.com or www.google.com to surf the internet to obtain the data for daily Kospi index and daily exchange rate.  [ current data; 50 or more observations ]

1)  Plot the independent variable and dependent variable combo in X-Y plain in that X=independent variable (Kospi), and Y=dependent variable (foreign exchange rate [ won per dollar ].

2) Utilize the Regression in the Excel menu to find the equation of the best fitted line

Won per Dollar^ = b  +  m * Kospi Index ( b = intercept, and m = slope),and write down the equation of this line.

3) Are this two parameter (b  and  m) statistically significant?  Answer yes or no, and

explain why.

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