A finance manager employed by an automobile dealership believes that the number of cars sold in his local market can be predicted by the interest rate charged for a loan. Interest Rate (%) Number of Cars Sold (100s) 3 10 5 7 6 5 8 2 The finance manager performed a regression analysis of the number of cars sold and interest rates using the sample of data above. Shown below is a portion of the regression output. Regression Statistics Multiple R 0.998868 R2 0.997738 Coefficient Intercept 14.88462 Interest Rate -1.61538 1. Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales?
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
A finance manager employed by an automobile dealership believes that the number of cars sold in his local market can be predicted by the interest rate charged for a loan.
|
Interest Rate (%) |
Number of Cars Sold (100s) |
|
3 |
10 |
|
5 |
7 |
|
6 |
5 |
|
8 |
2 |
The finance manager performed a
|
Regression Statistics |
|
|
Multiple R |
0.998868 |
|
R2 |
0.997738 |
|
Coefficient |
|
|
Intercept |
14.88462 |
|
Interest Rate |
-1.61538 |
1. Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
