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Pratice Fin1

# Pratice Fin1 - Practice Final Exam 1 The residual scatter...

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Practice Final Exam 1. The residual scatter plot of a SRM on the right consists of 104 observations. Then A. RMSE is around 0. B. RMSE is around 40 C. RMSE is around 25. D. RMSE cannot be estimated from the plot. 2-3. An insurance agent has selected a sample of drivers that she insures whose age in the range from 16 to 42 years. For each driver, she records the age of the driver and the dollar amount of claims that the driver filed in the previous 12 months. A scatterplot showing the dollar amount of claims as the response variable and the age as the predictor shows a linear trend. The least squares regression line is determined to be: A plot of the residuals versus age of the drivers showed no pattern, and the following were reported: , RMSE = 312.1. 2. Which of the following is correct? A. If the age of a driver increases from 20 to 21, the dollar amount of claims is predicted to be decreased by \$75.4. B. If the age of a driver increases by one year, the dollar amount of claims is predicted to be increased by \$3715. C. One can use the least squares regression line to obtain a reliable prediction of the dollar amount of claims for a driver whose age is 55 years. D. The dollar amount of claims for a driver of 10 years old is expected to be \$ 2961. 3. Which of the following is not correct? A. 82.2% of the variation in the dollar amounts of claims is explained by the age of the driver. B. The correlation r between the response variable and the predictor is 0.907. C. If the histogram of the residuals is symmetric around zero and bell-shaped, then about 68% of the dollar amounts of claims are within 312.1 dollars of the regression line. D. A driver in the data set whose age is 25 years had a residual of -\$150 using the fitted line above; this means his dollar amount of claims is \$1680. 4-6. Suppose that in the population the annual salary (Salary) of a CEO i measured in million dollars is related to the annual sales of the company (Sales) measured in million dollars according to the following regression model: Salary i = 5 + 0.1 Sales i + ε i where ε i are iid, independent of sales i , and ε i ~ N (0, 3 2 ). 4. What is the standard deviation for CEO salaries in million dollars of firms with annual sales of five million dollars? A. 3 B. 10 C. 19 D. 13.45 5. What is the expected difference in million dollars between the salary of CEO of a firm with five million dollars in annual sales and the CEO of a firm with annual sales of eight million dollars? A. -0.3 B. -0.5 C. 8 D. 5 6. What is the probability the salary of CEO is greater than 7 million dollars if the sales is 10 million dollars? A. 0.0438 B. 0.1110 C. 0.3707 D. 0.4562

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7. The residual plot for a linear regression model is shown below. Which of the following is true?
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Pratice Fin1 - Practice Final Exam 1 The residual scatter...

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