Question

A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) measured in dollars per month for services rendered to local companies. One independent variable used to predict service charges to a company is the company's sales revenue (X) measured in millions of dollars.

A 95% confidence interval for β₁ is found to be (15, 30) by analyzing the data for 21 companies. The interpretation of the confidence interval is that----

Select one:

a. You are 95% confident that mean service charge (Y) will increase between $15 and $30 for every $1 million increase in sales revenue (X)

b. You are 95% confident that mean service charge (Y) will increase between $150 and $300 for every $1 million increase in sales revenue (X)

c. You are 95% confident that the sales revenue (X) will increase between $15 and $30 million for every $1 increase in service charge (Y)

d. You are 95% confident that the mean service charge will fall between $15 and $30 per month

The managing partner of an advertising agency believes that his company's sales are related to the industry sales. He uses Minitab to analyze the last 4 years of quarterly data (i.e., n = 16) with the following results:

ANOVA

                       df          SS             MS              F     Sig.F

Regression        1       21.497      21.497       25.27   0.000

Error               14       11.912        0.851

Total               15       33.409

Based on the above table, what is the r² value i.e., the proportion of the variability in Y explained by the independent variable X?

Select one:

a. 64.34%

b. 76.54%

c. 54.34%

d. 89.99%

Answer 1

1)

Option a

We are 95% confident that service charge (y) will increase between $15 and $25 for every $1 million increase in sales revenue (x).

2)