The numbers of insured commercial banks y (in thousands) in the united states for the years 1987 to 1996 are shown in the table belo (Source: Federal Deposit Insurance Corporation) 1987 Number 13.70 (1000's) Year 1988 1989 1990 1991 1992 1994 1995 1996 12.99 13.12 12.71 12.34 11.92 12.27 12.51 12.68 a) What regression model would fit this data (linear, quadratic, cubic)= Explain.
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
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