HW04a_sol

# HW04a_sol - Homework 5 Soltuions Problem 6 2 Part A The...

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Homework 5 Soltuions Page 1 of 5 Problem 6 – 2 Part A The slope of 0.06 indicates that for every one billion dollar increase in GNP, AT&T’s earnings increase by 0.06 * \$1 billion = \$60 million Part B The Y-intercept of 0.078 indicates that if the GNP drops to zero, AT&T’s earning would be \$0.078 billion = \$78 million This is an unlikely scenario since a GNP of zero is an unlikely scenario and AT&T’s earning at a GNP of zero would be expected to be zero. The regression equation is valid for a range of GNP figures and extrapolating outside of this range (for example all the way to the Y-intercept) might provide erroneous predictions. Problem 6 – 5 Information provided: Bus Age, Years Cost, \$ 18 8 5 9 25 6 8 2 33 4 7 1 49 7 0 8 51 1 1 , 0 9 4 62 2 2 4 71 3 2 0 88 6 5 1 91 2 1 , 0 4 9 Part A Cost versus Age 0 200 400 600 800 1,000 1,200 02468 1 0 1 2 1 4 Age, Years Cost,\$ Part B There is a positive relation between the two variables. Part C The correlation coefficient is equal to 0.938

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Homework 5 Soltuions Page 2 of 5 Correlation coefficient calculation: XYX 2 Y 2 XY
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## This note was uploaded on 06/18/2011 for the course IEOR 4307 taught by Professor Dr.kosrowdehnad during the Summer '10 term at Columbia.

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HW04a_sol - Homework 5 Soltuions Problem 6 2 Part A The...

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