A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) -- measured in dollars per month -- for services rendered to local companies. One independent variable used to predict service charges to a company is the company's sales revenue (X) -- measured in millions of dollars. Data for 200 companies who use the bank's services were used to fit the model:

Yi=0+1Xj+j

The results of the simple linear regression are provided below.

Y=2700+20Xj

SYX= 65,p-value= 0.034 (for testing1), SST = 110.00, SSR = 90.25, n = 200

Question 2

1-Referring to the above Scenario, interpret the estimate of0, the Y-intercept of the line:

(3 marks)

• A All companies will be charged at least $2,700 by the bank.
• B There is no practical interpretation since a sales revenue of $0 is a nonsensical value
• C About 95% of the observed service charges fall within $2,700 of the least squares line.
• D For every $1 million increase in sales revenue, we expect a service charge to decrease$2,700.

Question 3

2- There is a positive relation between bank service charges and company's sales revenue

(2 marks)

• A True
• B False

Question 4

3- Referring to the above Scenario, interpret the p-value for testing whether1 exceeds 0.

(3 marks)

• A There is sufficient evidence (at the= 0.05) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y).
• B There is insufficient evidence (at the= 0.10) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y).
• C Sales revenue (X) is a poor predictor of service charge (Y).
• D For every $1 million increase in sales revenue, you expect a service charge to increase $0.034.

6- Referring to the above Scenario, the predicted bank charges for a company has a total sales revenue of $30 million is ________.

(4 marks)

• A 600
• B 600000000
• C 3300
• D 3300000000
• E None of the above