TABLE 13-1 A Large National Bank Charges Local Companies for Using Their

question 105

Multiple Choice

TABLE 13-1
A large national bank charges local companies for using their services.A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) -measured in dollars per month-for services rendered to local companies.One independent variable used to predict service charges to a company is the company's sales revenue (X) -measured in millions of dollars.Data for 21 companies who use the bank's services were used to fit the model:
Y_i = β₀ + β₁X_i + ε_i
The results of the simple linear regression are provided below.
-Referring to Table 13-1,interpret the estimate of β₀,the Y-intercept of the line.

• A)All companies will be charged at least $2,700 by the bank.
• B)There is no practical interpretation since a sales revenue of $0 is a nonsensical value.
• C)About 95% of the observed service charges fall within $2,700 of the least squares line.
• D)For every $1 million increase in sales revenue,we expect a service charge to decrease $2,700.

---

Definitions:

Poverty

A condition where individuals or communities lack the financial resources to meet basic needs such as food, shelter, and healthcare, often leading to long-term socio-economic challenges.

Morale

is the capacity of a group's members to maintain belief in an institution or goal, especially in the face of opposition or hardship.

Personal Control

The extent to which an individual feels they can influence or control the events and experiences affecting their life.

Retirement

The act of leaving one's job and ceasing to work, typically due to reaching a certain age or for health reasons, often leading to a period of personal adjustment.