A ?nancial institution specializing in venture capital is interested in predict- ing the success of business operations that the institution helps to finance. Success is defined by the institution as return on its investment, as a percentage, after 3 years of operation. The explanatory variables used are Investment (in thousands of dollars), Early investment (in thousands of dollars), and two dummy variables denoting the category of business. The values of these variables are (0, 0) for high technology industry, (0, 1) for biotechnology companies, and (1, 0) for aerospace ?rms. Following is part of the computer output for this analysis. Interpret the out- put, and give a complete analysis of the results of this study based on the provided information.
Multiple Regression 513
The regression equation is
Return = 6.16 + 0.617 INVEST + 0.151 EARLY + 11.1 DUM1 + 4.15 DUM2
|
Predictor
|
Coef
|
Stdev
|
|
Constant
|
6.162
|
1.642
|
|
INVEST
|
0.6168
|
0.1581
|
|
EARLY
|
0.1509
|
0.1465
|
|
DUM1
|
11.051
|
1.355
|
|
DUM2
|
4.150
|
1.315
|
s = 2.148 R-sq = 91.6% R-sq (adj) = 89.4%
Analysis of Variance
|
SOURCE
|
DF
|
SS
|
|
Regression
|
4
|
755.99
|
|
Error
|
15
|
69.21
|
|
Total
|
19
|
825.20
|