Question

Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (x) and the amount of fire damage, in thousands of dollars (). The MegaStat output is reported below ANOVA table Source Regression 1,830.5782 1 1,830.5782 41.15 Residual ,245.4934 28 Total df MS 44.4819 3,076.0716 29 Regression output Variables Coefficients Std. Error t (df-28) Intercept Distance-x 14.1988 3.9798 2.962 6.41 3.137 8.842 XC a-1. Write out the regression equation. (Round your answers to 3 decimal places.) X. b. How much damage would you estimate for a fire 9 miles from the nearest fire station? (Round your answer to the nearest dollar amount.) Estimated damage c-1. Determine the coefficient of determination. (Round your answer to 3 decimal places.) Coefficient of determination c-2. Fill in the blank below. (Round your answer to one decimal place.) % of the variation in damage is explained by variation in distance d-1. Determine the correlation coefficient. (Round your answer to 3 decimal places.) Correlation coefficient d-3. How did you determine the sign of the correlation coefficient? It is because the slope is e-1. State the decision rule for OOI significance level: Ho : ρ-O; HI : ρ # O. (Negative value should be indicated by a minus sign. Round your answers to 3 decimal places.) Reject HO if t or t> e-2. Compute the value of the test statistic for the hypothesis of β1. (Round your answer to 2 decimal places.) Value of the test statistic e-3. Is there any significant relationship between the distance from the fire station and the amount of damage? Use the 0.01 significance level HO. There is relationship between distance and fire damage

Answer 1

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