require(ggplot2)
require(dplyr)
require(corrgram)
require(lmtest)
require(broom)
require(ISLR)
######### THE BOND DATASET ########
bonds.dat = read.csv("http://www.stat.tamu.edu/~sheather/book/docs/datasets/bonds.txt", sep='\t')
p = ggplot(data = bonds.dat, aes(CouponRate, BidPrice)) +
geom_point() +
ggtitle("BidPrice vs CouponRate")
p
bondmodel = lm(BidPrice ~ CouponRate, data = bonds.dat)
pbond = p + geom_abline(aes(intercept = bondmodel$coefficients[1],
slope = bondmodel$coefficients[2]),
colour = "green") +
ggtitle("BidPrice vs CouponRate\n with Regression Line")
pbond
res = residuals(bondmodel)
pre = predict(bondmodel)
p_seg = pbond + geom_segment(aes(x = CouponRate, y = BidPrice, xend = CouponRate, yend = pre), colour="red")
p_seg
## eliminate three outliers
bondsclean.dat = bonds.dat[-c(4, 13, 35),]
bondcleanmodel = lm(BidPrice ~ CouponRate, data = bondsclean.dat)
p = ggplot(data = bondsclean.dat, aes(CouponRate, BidPrice)) +
geom_point() +
ggtitle("BidPrice vs CouponRate")
p
pbond = p + geom_abline(aes(intercept = bondcleanmodel$coefficients[1],
slope = bondcleanmodel$coefficients[2]),
colour = "green") +
ggtitle(" Vanilla Bond")
pbond
res = residuals(bondcleanmodel)
pre = predict(bondcleanmodel)
p_seg = pbond + geom_segment(aes(x = CouponRate, y = BidPrice,
xend = CouponRate, yend = pre),
colour="red")
p_seg
## clear the plots
## dev.off()
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