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(4.4) Using data from a pool of mortgage borrowers, a credit risk analyst performed an ordinary (4) least squares regression of annual savings (in
(4.4) Using data from a pool of mortgage borrowers, a credit risk analyst performed an ordinary (4) least squares regression of annual savings (in N$) against annual household income (in N$) and obtained the following relationship: Annual Savings 0.24 x Household Income - 825.96, with R2 = 0.80. Assuming all coefficients are statistically significant, which interpretation of this result is correct? A. For this sample data, the average error term is N$ -825.96. B. For a household with no income, annual savings is N$ 0. C. For an increase of N$ 1,000 in income, expected annual savings will increase by N$ 240. D. For a decrease of N$ 2,000 in income, expected annual savings will increase by N$ 480.
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