Professor Douglas Nottingham

March 27, 2014

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

The larger the size of the family the larger the credit balances is for the family. The larger families have the financial needs to have a larger credit balance.

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

Credit Balance ($) = 2591 + 403.2 Size

3. Determine the coefficient of correlation. Interpret.

The square root of R-Squared = .566 equals R; R = .75

4. Determine the coefficient of determination. Interpret.

The R-Squared is .566. The R-Squared is stating that 56.6% of the data is correct which indicates that the percentage of the total sample variation of the credit balance value is accounted for by the model.

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

Regression Analysis: Credit Balance ($) versus Size

The regression equation is

Credit Balance ($) = 2591 + 403 Size

Predictor Coef SE Coef T P

Constant 2591.4 195.1 13.29 0.000

Size 403.22 50.95 7.91 0.000

The p-value is 0.000 and therefore less than the α=.05 and we reject the Ho because there was not enough evidence too.

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

The finding that I have from 1-5 that there is a slight positive relationship between the size and credit balance and the reason for this would be because of the prediction of the model for the credit balance to be within 260.162 x2 (520.32)

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

Coefficients

Term Coef SE Coef T P 95% CI

Constant