Statistics II Assignment

1. Generate a scatterplot for CREDIT BALANCE vs. SIZE, including the graph of the “best fit” line. Interpret.

2. Determine the equation of the “best fit” line, which describes the relationship between CREDIT BALANCE and SIZE.

3. Determine the coefficient of correlation. Interpret.

4. Determine the coefficient of determination. Interpret.

5. Test the utility of this regression model (use a two tail test with α =.05). Interpret your results, including the p-value.

6. Based on your findings in 1-5, what is your opinion about using SIZE to predict CREDIT BALANCE? Explain.

7. Compute the 95% confidence interval for beta-1 (the population slope).  Interpret this interval.

8. Using an interval, estimate the average credit balance for customers that have household size of 5. Interpret this interval.

9. Using an interval, predict the credit balance for a customer that has a household size of 5. Interpret this interval.

10. What can we say about the credit balance for a customer that has a household size of 10? Explain your answer

In an attempt to improve the model, we attempt to do a multiple regression model predicting CREDIT BALANCE based on INCOME, SIZE and YEARS.

11. Using MegaStat run the multiple regression analysis using the variables INCOME, SIZE and YEARS to predict CREDIT BALANCE. State the equation for this multiple regression model.

12. Perform the Global Test for Utility (F-Test). Explain your conclusion.

13. Perform the t-test on each independent variable. Explain your conclusions and clearly state how you should proceed. In particular, which independent variables should we keep and which should be discarded.

14. Is this multiple regression model better than the linear model that we generated in parts 1-10? Explain.

Summarize your results from 1-14 in a report that is three pages or less in length and explain and interpret the results.

2

>Sheet

1

00)

2 12

5

North East

4

00

5

Mid West 31 2 4

North East

2 9

Mid West

1

31

North East 40 2 7

North West

4 10

North East 51 3

0

North East

3 11

North East 48 4 16

Mid West 27 1 19

Mid West 33 2 12

North East

3 12

4

North West

4

North East 55 6

12

North East 21 2

Mid West 44 1 7

95

North East 37 5 5

71

North West

6 13

8

North East 21 3 16

North West 55 7 15

Mid West 42 2 19

North East 41 7 18

North West

6 14

Mid West 30 1 14

North East 48 2 8

North East

5 5

86

North West 67 4 13

Mid West 50 2 11

North East 67 5 1

North East 55 6 10

North East

2 11

North East 62 3 2

North East 64 2 6

North West

3 18

North East 29 4 4 3890
North West

2 18

Mid West 35 1 11

North East 39 4 15

North West 54 3 9

North West 23 6 18

Mid West 27 2 1

North East

7

03

North West

2 14

Mid West 30 2 14

Mid West 22 4 16

North West 46 5 13

North West 66 4 20

Location	Income ($		10	Size	Years	Credit Balance($)
																						North East								5											4								3				12		40		1						6
												Mid West			30		31		9
32	1					7		51
													North West		50					14	47	42
		1	8	64
			55	4070
	37		20			27
	33		48
	66	4764
	16	4				11
25	4208
42		19
2477
2514
65	4		21
63				13	4965
		15		44
		18	2448
	29
	41
	62	5		67
36	23
5301
3020
4828
	54	5573
2583
3866
34		35
5037
3605
5345
5370
52		3890
4705
4157
	22	3899
	39	2972
3121
4183
3730
4127
2921
26	17		46
61	4273
3067
3074
4820
5149

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Sheet3