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Unformatted text preview: considered for test Chi2 distribution in this case? f) Knowing that the χ2 value is 6.25 and its pvalue is 4.39%, what we can conclude about the
statistical significance and the strength of the relation? g) Which are the managerial conclusions of this survey? 3 3) LINEAR CORRELATION ANALYSIS
Like all firms, life insurance companies continually seek new ways to deliver products to the
market. Those involved in product development want to know who buys insurance and how much
they buy. Analysts can readily get information on characteristics of current customers through
company databases. Potential customers, those who do not have insurance with the company, are
often the main focus for expanding market share.
We consider here a survey on a sample of n = 275 families that purchased term life insurance. The
analysis aims at determining family characteristics that influence the amount of insurance
purchased. The variables under scrutiny are:
è༎ • FACE amount that the company will pay in the event of the death of
the named insured, • INCOME è༎ annual income of the respondent, • EDUCATION è༎ number of years of education of the survey respondent, • NUMHH è༎ number of household members. Using the JMP outputs attached below, answer to the following questions:
a) Is the FACE distribution skewed? If yes, on which side? Provide a justification for your
answer.
b) Which variables are most highly correlated with FACE?
c) Would you reject the null hypothesis that the population correlation coefficient between
FACE and NUMHH is zero? Explain briefly (use an α = 5%). d) Would you trust in the results reported in attachment? Why? 4 Distributions
FACE
Quantiles 14000000 Summary Statistics 100.0% maximum
1e+7
99.5%
9190600
97.5%
1020000
90.0%
295200
75.0%
quartile 120000
50.0%
median
65000
25.0%
quartile
38000
10.0%
20000
2.5%
4000
0.5%
260
0.0%
minimum
260 Mean
Std Dev
Std Err Mean
Upper 95% Mean
Lower 95% Mean
N Quantiles 4000000 8000000 Mean
Std Dev
Std Err Mean
Upper 95% Mean
Lower 95% Mean
N Quantiles 0 Summary Statistics 100.0% maximum 1.4e+7
99.5%
1.25e+7
97.5%
5325000
90.0%
2000000
75.0%
quartile 600000
50.0%
median 150000
25.0%
quartile
50000
10.0%
10000
2.5%
4900
0.5%
1446
0.0%
minimum
800 Summary Statistics 747581.45
1674362.4
100967.85
946...
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 Fall '14
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