In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables?
Answer(s): C
Because the range of values is between -1.0 and 1_0, -.89 suggests a very strong inverse relationship between the independent and dependent variables. A value of -1.0 signifies a perfect inverse relationship, and a value of 1.0 signifies a perfect direct relationship.
The internal auditor of a bank has developed a multiple regression model which has been used for a number of gears to estimate the amount of interest income from commercial loans. During the current year, the auditor applies the model and discovers that the r2 value has decreased dramatically, but the model otherwise seems tc be working okay. Which of the following conclusions is justified by the change?
The coefficient of determination r-) is the amount of variation in the dependent variable interest income) that is explained by the independent variables. In this case, less of the change in interest income is explained by the model. Thus, some other factor must be causing interest income to change. This change merits audit investigation. In preparing the annual profit plan for the coming year, Wilkens Company wants to determine the cost behavior pattern of the maintenance costs. Wilkens has decided to use linear regression by employing the equation = a + bx for maintenance costs. The prior year's data regarding maintenance hours and costs, and the results of the regression analysis, are given below and in the opposite column.
In the standard regression equation y = a + bx, how is the letter b best described?
Answer(s): D
In the standard regression equation, b represents the variable coefficient. For example, in a cost determination regression, equals total costs, b is the variable cost per unit, is the number of units produced, and a is fixed cost. In preparing the annual profit plan for the coming year, Wilkens Company wants to determine the cost behavior pattern of the maintenance costs.Wilkens has decided to use linear regression by employing the equation = a + bx for maintenance costs. The prior year's data regarding maintenance hours and costs, and the results of the regression analysis, are given below and in the opposite column.
How is the letter x in the standard regression equation best described?
Answer(s): A
The letters x in the standard regression equation is the independent variable. For example, in a regression to determine the total cost of production, equal units produced. In preparing the annual profit plan for the coming year, Wilkens Company wants to determine the cost behavior pattern of the maintenance costs. Wilkens has decided to use linear regression by employing the equation = a + bx for maintenance costs. The prior year's data regarding maintenance hours and costs, and the results of the regression analysis, are given below and in the opposite column.
Based upon the data derived from the regression analysis, 420 maintenance hours in a month would mean the maintenance costs rounded to the nearest U dollar) would be budgeted at
Substituting the given data into the regression equation results in a budgeted cost o US $3, 746 rounded to the nearest US dollar).y = a + bxy = 684.65 + 7.2884 420y = us $3, 746
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