BestS Review (June 1999) compared the mortgage loan portfolios for a sample of 25 lifelhealth insurance companies. The information in the table on page 629 is extracted from the articlc. Suppose you want to model the percentage of problcm mortgages

- (y) of a company as a function of total mortgage loans

(x,), percentage of invested assets (x,), percentage of commercial mortgages (x,), and percentage of residential mortgages (x,).

a. Write a first-order model for E(y).

b. Fit the model of part a to the data and evaluate its overall usefulness. Use a = .05.

c. Interpret the P estimates in the fitted model.

d. Construct scattergrams of y versus each of the four independent variables in the model. Which variables warrant inclusion in the model as secondorder (i.e., squared) terms?