SCENARIO 12-1
a Large National Bank Charges Local Companies for Using

question 91

Multiple Choice

SCENARIO 12-1
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: $$Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { i } + \varepsilon _ { i }$$
Theresultsofthesimplelinearregressionareprovidedbelow.
$$\bar { I } = - 2,700 + 20 X , S _ { Z X } = 65 \text {, two-tail } p \text { value } = 0.034 \text { (for testing } \beta _ { 1 } \text { ) }$$
-Referring to Scenario 12-1, interpret the p-value for testing whether $\beta$ 1 exceeds 0.

• A)There is sufficient evidence (at the \(\alpha\)= 0.05)to conclude that sales revenue (X)is a useful linear predictor of service charge (Y).
• B)There is insufficient evidence (at the \(\alpha\) = 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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