SCENARIO 13-1
a Large National Bank Charges Local Companies for Using

question 134

Multiple Choice

SCENARIO 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 = $\beta$ ₀ + $\beta$ ₁ X_i + $\varepsilon$ _i
The results of the simple linear regression are provided below.
? = -2,700 +20 X ,S_YX = 65,two-tail p value = 0.034 (for testing $\beta$ ₁)
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-Referring to Scenario 13-1,interpret the p-value for testing whether $\beta$ ₁ exceeds 0.

• A)There is sufficient evidence (at the ? = 0.05)to conclude that sales revenue (
• X)is a useful linear predictor of service charge (
• Y).
• B)There is insufficient evidence (at the ? = 0.10)to conclude that sales revenue (
• X)is a useful linear predictor of service charge (
• Y).
• C)Sales revenue (
• X)is a poor predictor of service charge (
• Y).
• D)For every $1 million increase in sales revenue,you expect a service charge to increase $0.034.

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