The scatter plot below shows data for the value of a new mutual fund (y), in thousands of dollars, in a given year, where x is the year. The least squares regression line is given by yˆ=28,450−344x. Interpret the slope of the least squares regression line. Select the correct answer below: On average, the value of the mutual fund is expected to decrease by $344,000 each year. On average, the value of the mutual fund is expected to increase by $344,000 each year. The value of the mutual fund decreases by exactly $344,000 each year. The slope should not be interpreted.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
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Interpret the slope of the least squares regression line.
Select the correct answer below:
On average, the value of the mutual fund is expected to decrease by $344,000 each year.
On average, the value of the mutual fund is expected to increase by $344,000 each year.
The value of the mutual fund decreases by exactly $344,000 each year.
The slope should not be interpreted.
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