The regression equation simply describes the relationship between the dependent variable (y) and the independent variable (x). The intercept, or "a," is the value of y (dependent variable ...

For example, the dependent variable could be a firm’s stock price ... and the stock price of the company in question. This equation is the formula for the line of best fit.

This note returns to the topic of endogeneity, explaining how a predictor variable can be endogenous (and therefore its coefficient can be biased) if causality is in doubt. Through an extended example ...