STAT 440 - Forecasting
Lecture Review - Least Squares
SOLUTIONS

This page gives detailed solutions on the lecture review assignment on least squares. You should of course make a diligent effort to obtain these solutions on your own before consulting this solution page. You learn from what you do, far more than from what you read. But this information is presented so you can check the details of your work.

The form of the model now is

which means that the error term is

and so the Sum of Squares for Error (SSE) is

We want to find the value of β₁ that minimizes SSE. To do so, we take the derivative:

The least squares estimate of β₁ is found by setting this derivative equal to zero:

And hence the slope of an interceptless linear regression model is found by