HIRA (10826)

a) Interpret R, R square and 1 – R square

R:
ANSWER:
Value of R shows that 60% is a correlation between home price and interest rate.

RSQUARE:
38.5% Variation in home price (Dv) due to interest rate (ID).

1-R SQUARE:
61.5% variation in home price (dv) due to other factors.

b) Find the least square regression line y = a x + b.

ANSWER:

Home price= 393348.616+(-23409.448) interest rate

Home price = 393348.616-23409.448 interest rate

a) Interpret constant and slope.

ANSWER:

CONSTANT
If interest rate is equal to (0) home price will be 393348.616

SLOPE
If interest rate is increased by 1 unit home price will be increased by (23409.448).

b) Use the least squares regression line as a model to estimate the home price in 2004 when
the interest rate would be 5.00 %.
ANSWER:

Home price in 2004 will be 346290.s