A Study of the Top 75 MBA Programs Attempted to Predict

question 94

Multiple Choice

A study of the top 75 MBA programs attempted to predict the average starting salary (in $1000's) of graduates of the program based on the amount of tuition (in $1000's) charged by the program. The results of a simple linear regression analysis are shown below: Least Squares Linear Regression of Salary

$\begin{array}{lrrcl}\text {Predictor}\\\text { Variables } & \text { Coefficient } & \text { Std Error } & \text { T } & \text { P } \\\text { Constant } & 18.1849 & 10.3336 & 1.76 & 0.0826 \\\text { Size } & 1.47494 & 0.14017 & 10.52 & 0.0000\end{array}$

R-Squared $\quad\quad\quad \quad 0.6027 \quad$ Resid. Mean Square (MSE) $532.986$
Adjusted R-Squared $\quad0.5972\quad$ Standard Deviation $\quad\quad\quad 23.0865$


In addition, we are told that the coefficient of correlation was calculated to be $r = 0.7763$ . Interpret this result.

• A) There is almost no linear relationship between the amount of tuition charged and the average starting salary variables.
• B) There is a very weak positive linear relationship between the amount of tuition charged and the average starting salary variables.
• C) There is a fairly strong positive linear relationship between the amount of tuition charged and the average starting salary variables.
• D) There is a fairly strong negative linear relationship between the amount of tuition charged and the average starting salary variables.

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Definitions:

Interest

The fee charged for borrowing money, often expressed as a percentage of the principal amount.

Maturity Date

The specified date on which the final payment of a loan or other financial instrument is due to be paid.

Bondholders

Individuals or institutions that hold the debt securities issued by corporations or governmental entities, entitling them to receive interest payments and the return of principal.

Issuing Corporation

A company that sells or offers its shares to the public or to private investors.