Wednesday, March 23, 2011

Ch 6 project: Curve Fitting with Polynomial Models

First, I went on Yahoo Finance and look for the opening price of my index and stock for January 5 of the years: 1994, 1995, 1996, 1997, 2000, 2001, 2003, and 2004. Next, I insert the data into my calculator by using the STAT function. Then I try to use the different regression options: quadratic regression, cubic regression, and quartic regression. From there, I choose the correlation coefficient that is closest to 1. Then I use the use the polynomial function to predict the prices for given years: 2002, 2005, 2008, 2010, and 2011. I go on Yahoo Finance again to look for the actual opening prices. Many of the outcomes did not match my predictions, but that takes me onto the next step. Then, I have to look on the internet to research major news events that would explain why my predictions are wrong.

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