Tracy, senior analyst at CMSSP Capital reviewed Cronin (his junior’s) regression analysis. He asked Cronin how the key inputs to the regression could affect the ultimate results. Cronin explained the effects of some of these inputs and assumptions, Cronin made the following comments:

Comment 1: “The standard error of estimate is an important input for a hypothesis test. Small standard errors result in both tighter confidence intervals and tighter prediction intervals.”

Comment 2: “The estimated value for the variance of the independent variable can also affect hypothesis testing. The higher the assumed variance, the tighter the prediction intervals. However, changes in the assumed variance will have no effect on the confidence interval.”

Cronin is most accurate with respect to: