BUS 173 Final Assignment Faculty (ZKH3)

Prepared by, Nizamul Karim ID: 1721651030

Answer to the Q: NO: 1

A)

The scatter diagram for the driving Experience (years) and monthly insurance premium ($) is
given bellow:

90 Scater Plot
Monthly Insurance Premium ($)

80
70
60
50
40
30
20
10
0
0 5 10 15 20 25
Driving Exprience (years)

B)

The linear regression model is suitable regression model for the above scatterplot , since
insurance premium is linearly related with driving experience.

Assumption:

1. The parameters must be linear in the regression model, and the variables may or may not
be linear.
2. Variance of error term is constant.
3. There is no relation between the error terms.
4. The error terms are normally distribution with mean 0 and constant variance.
C)

The calculation for the slope coefficient is given in the bellow table.

Driving Experience Monthly Insurance XY x2 Y2

(X) Premium (Y)
3 72 216 9 5184
5 65 325 25 4225
2 75 150 4 5625
10 45 450 100 2025
8 50 400 64 2500
15 30 450 225 900
6 60 360 36 3600
20 20 400 400 400
16 27 432 256 729
1 80 80 1 6400
∑ X = 8.6 ∑Y = 524 ∑xy = 3263 ∑X 2 ∑Y 2
= 1120 = 31588

Slope Coefficient:

The value of SS xy and SS XX are ,

x∗∑ 524
S xy = ∑ xy – { ∑ n
}

(86∗524)
= 3263 – { 10
}

= -1243.4

S xx = ∑ X 2- { ¿ ¿ ¿ }
 862
= 1120 – ( 10
)

= 380.4

Now,

S xy
^β = S xx

−1243.4
= 380.4

= -3.269
Interpretation:

The slope coefficient can be interpreted as the driving experience increases by 1 year leads to
decrease the monthly insurance premium by 3.269 units.

D)

S yy = ∑ y2 – {¿ ¿ ¿ }

(524)2
= 31588 – { } [Y 2=31588 ¿ (c)¿]
10

= 4130.4

The value of correlation coefficient is calculated as follows.

 S xy
r = √ S ∗S
xx yy

−1243.4
= √380.4∗4130.4

= -0.992

Comment:

The value of correlation coefficient is closely around the (-1) which sate that there is
approximately perfect negative relation between the monthly insurance premium and driving
years.

E)

Step 1

Ho;β = 0 (The slope of the regression line is not negative)

H1; β < 0 (The slope of the regression line is negative)

Step 2

t – Distribution

Step 3

Critical value + Regions,

d = 0.01[left tailed] &

df = n-2 =10-2 = 8

≫ critical value of t = -2.896

 Rejected H Non rejected H

-2.896

Step 4

SSYY −bss xy
Here, Se =
√ n−2
=
√ {4130.4−(−30268 ) (−1243.4 ) }
10−2
= 2.893

Se 2.893
Sb = √ SS = √3.804 = 0.148
xx

b− β
Now, t = Sb

−3.268−0
= −0.148 = -22.08

Step 5

Decision, Since t = -22.08 falls under Rejection region, we reject H o.

Step 6

The slope of the regression line is negative. Since, the P-value is less than level of significance
the null hypothesis is rejected, and it concluded that the slope of regression line is negative.

Answer to the Q: NO: 2

A)

Linear forecasting equation, Y= a+bx

Here,
Y = Sales
X = time period

Time period (X) Sales (Y) XY X2 Y2

0 10 0 0 100
1 20 20 1 400
2 33 66 4 1089
3 45 135 9 2025
4 50 200 16 2500
5 55 275 25 3025
6 60 360 36 3600
7 65 455 49 4225
8 70 560 64 4900
9 75 675 81 5625
10 80 800 100 6400
∑ x = 55 ∑ y= 563 ∑ xy = 3546 ∑ X 2= 385 ∑ Y 2= 33889

We know,

n XY −( ∑ x ) ( ∑ Y )
b= ∑
n¿¿
( 11∗3546 )−( 55∗563)
= ( 11∗358 )−(55)2

= 6.645
Now we know,

Ý = a + b X́
≫ 51.18 = a + (6.645*5)
≫ a = 17.955
So the equation is, Y = 17.955 + 6.645 X

B)
Here,
X = 60
Now,
Y = 17.955 + (6.645*6)

= 416.665