The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with electronic trades handled by discount brokers. As part of the survey, members were asked to rate their satisfaction with the trade price and the speed of execution, as well as provide an overall satisfaction rating. Possible responses (scores) were no opinion (0), unsatisfied (1), somewhat satisfied (2), satisfied (3), and very satisfied (4). For each broker, summary scores were computed by computing a weighted average of the scores provided by each respondent. A portion the survey results follow (AAII web site, February 7, 2012). Brokerage Satisfaction with Trade Price Satisfaction with Speed of Execution Overall Satisfaction with Electronic Trades Scottrade, Inc. 3.4 3.4 3.5 Charles Schwab 3.2 3.3 3.4 Fidelity Brokerage Services 3.1 3.4 3.9 TD Ameritrade 2.9 3.6 3.7 E*Trade Financial 2.9 3.2 2.9 (Not listed) 2.5 3.2 2.7 Vanguard Brokerage Services 2.6 3.8 2.8 USAA Brokerage Services 2.4 3.8 3.6 Thinkorswim 2.6 2.6 2.6 Wells Fargo Investments 2.3 2.7 2.3 Interactive Brokers 3.7 4.0 4.0 Zecco.com 2.5 2.5 2.5 Firstrade Securities 3.0 3.0 4.0 Banc of America Investment Services 4.0 1.0 2.0 answer: 1. Interpret the estimated regression parameters. Are the relationships indicated by these estimates what you would expect? (i) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 0. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution. β2 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price. (ii) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 0. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price. β2 is the is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution. (iii) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 1. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price. β2 is the is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution. (iv) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 1. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution. β2 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price.
The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with electronic trades handled by discount brokers. As part of the survey, members were asked to rate their satisfaction with the trade price and the speed of execution, as well as provide an overall satisfaction rating. Possible responses (scores) were no opinion (0), unsatisfied (1), somewhat satisfied (2), satisfied (3), and very satisfied (4). For each broker, summary scores were computed by computing a weighted average of the scores provided by each respondent. A portion the survey results follow (AAII web site, February 7, 2012).
Brokerage |
Satisfaction with Trade Price |
Satisfaction with Speed of Execution |
Overall Satisfaction with Electronic Trades |
| Scottrade, Inc. | 3.4 | 3.4 | 3.5 |
| Charles Schwab | 3.2 | 3.3 | 3.4 |
| Fidelity Brokerage Services | 3.1 | 3.4 | 3.9 |
| TD Ameritrade | 2.9 | 3.6 | 3.7 |
| E*Trade Financial | 2.9 | 3.2 | 2.9 |
| (Not listed) | 2.5 | 3.2 | 2.7 |
| Vanguard Brokerage Services | 2.6 | 3.8 | 2.8 |
| USAA Brokerage Services | 2.4 | 3.8 | 3.6 |
| Thinkorswim | 2.6 | 2.6 | 2.6 |
| Wells Fargo Investments | 2.3 | 2.7 | 2.3 |
| Interactive Brokers | 3.7 | 4.0 | 4.0 |
| Zecco.com | 2.5 | 2.5 | 2.5 |
| Firstrade Securities | 3.0 | 3.0 | 4.0 |
| Banc of America Investment Services | 4.0 | 1.0 | 2.0 |
answer:
1. Interpret the estimated regression parameters. Are the relationships indicated by these estimates what you would expect?
(i) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 0. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution. β2 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price.
(ii) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 0. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price. β2 is the is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution.
(iii) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 1. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price. β2 is the is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution.
(iv) β0 is the estimated overall satisfaction with the electronic trade when satisfaction with trade price and speed of execution are both 1. β1 is the estimated change in overall satisfaction with the electronic trade if satisfaction with trade price is held constant and there is a 1 point increase in satisfaction with speed of execution. β2 is the estimated change in overall satisfaction with the electronic trade if satisfaction with speed of execution is held constant and there is a 1 point increase in satisfaction with trade price.
2.
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