EP BASIC BUS.STATS-ACCESS (18 WEEKS)
EP BASIC BUS.STATS-ACCESS (18 WEEKS)
14th Edition
ISBN: 9780135989005
Author: BERENSON
Publisher: PEARSON CO
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Chapter 13, Problem 78PS

An analyst has the objective of predicting the return on average tangible common (ROATCE) of banks. The analyst begins by using efficiency ratio, a measure of a bank’s ability to turn resources into revenue. A sample of 100 American banks is selected and stored in AmericanBanks.

a. Construct a scatter plot and, assuming a linear relationship, use the least-squares method to compute the regression coefficients b 0 and b 1 .

b. Interpret the meaning of Y Intercept, b 0 , and the slope, b 1 , in this problem.

c. Use the prediction line developed in (a) to predict the mean ROATCE for a bank with an efficiency ratio of 60 % .

d. Determine the coefficient of determination, r 2 , and interpret its meaning in this problem.

e. Perform a residual analysis on your results and evaluate the regression assumptions.

f. At the 0.05 level of significance, is there evidence of a linear relationship between efficiency ratio and ROATCE?

g. Construct a 95 % confidence interval estimate of the mean ROATCE of banks with an efficiency ratio of 60 % and a 95 % prediction interval of the ROATCE for a particular bank with an efficiency ratio of 60 % .

h. Construct a 95 % confidence interval estimate of the population slope.

i. What conclusions can you reach concerning the relationship between efficiency ratio and ROATCE?

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Chapter 13 Solutions

EP BASIC BUS.STATS-ACCESS (18 WEEKS)

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