This is a study to predict the average volume of fixed deposit (FD) held by the public on a quarterly basis from different areas (metropolitan, city or town). The equation in the simple linear regression is a demand relationship, and we would expect the dependent variable to depend on total personal wealth (PW), on the interest rate that individuals receive when part of that wealth is invested in a fixed deposit, and so on. The primary interest rate on fixed deposit (RFDP) was therefore chosen as an independent variable. However fixed deposit must compare with other interest-bearing assets such as government bonds. Thus, the interest rate on government bond (RGB) is also an independent variable; when this variable increases, the total demand for fixed deposit should decrease.

Being a consultant of Ministry of Finance, you are required to perform some data analysis on the demand of fixed deposit. The relevant data has been provided to you by the ministry in Appendix 1 and 2.

(a)Find the mean, standard deviation and measure of skewness of the Fixed Deposit and Personal Wealth for each area. Interpret the mean, standard deviation and skewness for each area.

(24 marks)

(b)Use the hypothesis test to assess whether there is different in means of Fixed Deposit among different areas. Show the standard error, confidence interval and p-value for each comparison. Interpret the significance of each comparison (also state the null and alternative hypothesis).

(36 marks)

(c)For each area, conduct a simple linear regression for the fixed deposit on the personal wealth; interest rate on fixed deposit; interest rates on government bonds (use only ONE pair). For each area:

(i)plot the scatter plot and interpret it.

(9 marks)

(ii)write the simple linear regression equation. Interpret the coefficient of intercept and the slope.

(18 marks)

(iii)interpret the coefficients of correlation and determination.

(9 marks)

(iv) test the significance of the inferences of slope.

(4 marks)

APPENDIX 1 - VARIABLES

Area :the area that the banks located

RFDP: primary interest rate on fixed deposit (%)

FD: average of fixed deposit per account (RM '000)

PW:average personal wealth (RM '000)

RGB:interest rates on government bonds (%)

APPENDIX 2 - Data

Time

Area

RFDP

FD

PW

RGB

2008Q1

Metropolitan

4.75

28

367

2.95

2008Q1

City

4.75

15

238

2.95

2008Q1

Town

4.75

8

140

2.95

2008Q2

Metropolitan

4.9

32

369

2.75

2008Q2

City

4.9

17

240

2.75

2008Q2

Town

4.9

9

142

2.75

2008Q3

Metropolitan

4.9

29

378

2.95

2008Q3

City

4.9

18

248

2.95

2008Q3

Town

4.9

10

140

2.95

2008Q4

Metropolitan

4.82

29

373

3

2008Q4

City

4.82

17

250

3

2008Q4

Town

4.82

8

145

3

2009Q1

Metropolitan

4.82

23

380

2.9

2009Q1

City

4.82

16

251

2.9

2009Q1

Town

4.82

8

146

2.9

2009Q2

Metropolitan

4.73

22

390

3.1

2009Q2

City

4.73

15

253

3.1

2009Q2

Town

4.73

7

148

3.1

2009Q3

Metropolitan

4.66

22

402

3.2

2009Q3

City

4.66

15

255

3.2

2009Q3

Town

4.66

6

149

3.2

2009Q4

Metropolitan

4.75

24

410

2.95

2009Q4

City

4.75

14

256

2.95

2009Q4

Town

4.75

7

150

2.95

2010Q1

Metropolitan

4.6

23

417

3.1

2010Q1

City

4.6

13

257

3.1

2010Q1

Town

4.6

7

151

3.1

2010Q2

Metropolitan

4.58

23

421

2.75

2010Q2

City

4.58

12

260

2.75

2010Q2

Town

4.58

6

152

2.75

2010Q3

Metropolitan

4.7

26

425

2.95

2010Q3

City

4.7

14

262

2.95

2010Q3

Town

4.7

7

153

2.95

2010Q4

Metropolitan

4.7

25

430

3

2010Q4

City

4.7

15

264

3

2010Q4

Town

4.7

7

153

3

2011Q1

Metropolitan

4.75

24

440

2.85

2011Q1

City

4.75

15

265

2.85

2011Q1

Town

4.75

8

154

2.85

2011Q2

Metropolitan

4.65

23

450

3.2

2011Q2

City

4.65

15

266

3.2

2011Q2

Town

4.65

6

155

3.2

2011Q3

Metropolitan

4.5

22

453

2.85

2011Q3

City

4.5

15

267

2.85

2011Q3

Town

4.5

5

157

2.85

2011Q4

Metropolitan

4.45

21

451

2.9

2011Q4

City

4.45

14

270

2.9

2011Q4

Town

4.45

4

158

2.9

2012Q1

Metropolitan

4.45

21

462

2.85

2012Q1

City

4.45

15

271

2.85

2012Q1

Town

4.45

4

160

2.85

2012Q2

Metropolitan

5

33

467

2.75

2012Q2

City

5

18

273

2.75

2012Q2

Town

5

10

162

2.75

2012Q3

Metropolitan

4.75

25

469

3

2012Q3

City

4.75

17

275

3

2012Q3

Town

4.75

7

163

3

2012Q4

Metropolitan

4.58

21

474

2.95

2012Q4

City

4.58

16

276

2.95

2012Q4

Town

4.58

5

163

2.95

2013Q1

Metropolitan

4.5

24

480

2.85

2013Q1

City

4.5

15

278

2.85

2013Q1

Town

4.5

5

164

2.85

2013Q2

Metropolitan

4.3

22

482

2.9

2013Q2

City

4.3

15

280

2.9

2013Q2

Town

4.3

3

165

2.9

2013Q3

Metropolitan

4.6

23

485

3

2013Q3

City

4.6

14

281

3

2013Q3

Town

4.6

6

166

3

2013Q4

Metropolitan

4.6

24

490

2.85

2013Q4

City

4.6

13

282

2.85

2013Q4

Town

4.6

5

167

2.85

2014Q1

Metropolitan

4.48

23

493

3.2

2014Q1

City

4.48

12

284

3.2

2014Q1

Town

4.48

4

168

3.2

2014Q2

Metropolitan

4.48

24

496

2.95

2014Q2

City

4.48

12

286

2.95

2014Q2

Town

4.48

4

170

2.95

2014Q3

Metropolitan

4.75

24

501

2.85

2014Q3

City

4.75

14

288

2.85

2014Q3

Town

4.75

7

171

2.85

2014Q4

Metropolitan

4.6

24

503

3

2014Q4

City

4.6

14

292

3

2014Q4

Town

4.6

6

172

3

2015Q1

Metropolitan

4.5

28

260

3.2

2015Q1

City

4.5

15

200

3.2

2015Q1

Town

4.5

5

120

3.2

2015Q2

Metropolitan

4.5

27

270

2.9

2015Q2

City

4.5

14

203

2.9

2015Q2

Town

4.5

5

123

2.9

2015Q3

Metropolitan

4.7

26

280

3.2

2015Q3

City

4.7

14

208

3.2

2015Q3

Town

4.7

6

124

3.2

2015Q4

Metropolitan

4.6

25

292

3

2015Q4

City

4.6

13

210

3

2015Q4

Town

4.6

6

127

3

2016Q1

Metropolitan

4.6

27

301

3.1

2016Q1

City

4.6

14

215

3.1

2016Q1

Town

4.6

6

129

3.1

2016Q2

Metropolitan

4.55

25

310

2.75

2016Q2

City

4.55

13

218

2.75

2016Q2

Town

4.55

6

131

2.75

2016Q3

Metropolitan

4.55

26

325

2.95

2016Q3

City

4.55

14

220

2.95

2016Q3

Town

4.55

5

133

2.95

2016Q4

Metropolitan

4.55

25

332

3.2

2016Q4

City

4.55

13

225

3.2

2016Q4

Town

4.55

4

134

3.2

2017Q1

Metropolitan

5.1

30

339

3

2017Q1

City

5.1

18

228

3

2017Q1

Town

5.1

10

135

3

2017Q2

Metropolitan

5.1

32

345

3.1

2017Q2

City

5.1

19

230

3.1

2017Q2

Town

5.1

10

129

3.1

2017Q3

Metropolitan

4.9

31

350

2.75

2017Q3

City

4.9

17

232

2.75

2017Q3

Town

4.9

9

134

2.75

2017Q4

Metropolitan

4.75

23

360

2.9

2017Q4

City

4.75

14

235

2.9

2017Q4

Town

4.75

7

138

2.9