Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (x) and the amount of fire damage, in thousands of dollars (y). The MegaStat output is reported below. ANOVA tableSourceSSdfMSFRegression1,850.578211,850.5782 39.69Residual1,305.49342846.6248 Total3,156.071629 Regression outputVariablesCoefficientsStd. Errort(df=28)Intercept12.68823.16992.82Distance–X5.1218.5046.3 e-1. State the decision rule for 0.01 significance level: H0 : ρ = 0; H1 : ρ ≠ 0. (Negative value should be indicated by a minus sign. Round your answers to 3 decimal places.) e-2. Compute the value of the test statistic. (Round your answer to 2 decimal places.) e-3. Is there any significant relationship between the distance from the fire station and the amount of damage? Use the 0.01 significance level.

Solution: Given information: n= 30 observation Sum of square of regression= SSR=1850.5782 Sum of…

Answered: Waterbury Insurance Company wants to…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (x) and the amount of fire damage, in thousands of dollars (y). The MegaStat output is reported below.

ANOVA table
Source	SS	df	MS	F
Regression	1,850.5782	1	1,850.5782		39.69
Residual	1,305.4934	28	46.6248
Total	3,156.0716	29

Regression output
Variables	Coefficients	Std. Error	t(df=28)
Intercept	12.6882	3.1699	2.82
Distance–X	5.121	8.504	6.3

e-1. State the decision rule for 0.01 significance level: H₀ : ρ = 0; H₁ : ρ ≠ 0. (Negative value should be indicated by a minus sign. Round your answers to 3 decimal places.)

e-2. Compute the value of the test statistic. (Round your answer to 2 decimal places.)

e-3. Is there any significant relationship between the distance from the fire station and the amount of damage? Use the 0.01 significance level.

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