Chapter 12.1, Problem 22E

To determine

To select the best option for what is the correlation between the selling price and appraised value.

Answer to Problem 22E

The option (d) is the correct option.

Explanation of Solution

In the question, appraised market price and the actual market price are compared and the computer output of the data is given. Thus, as we know that the square of the correlation $r^2$ is given in the computer output as “R-Sq” as:

  $r^2=86.1\%=0.861$

Thus, the slope of the least squares regression line is $1.0466$ which is positive and thus we know that the linear correlation coefficient r is also positive. Then, the linear correlation r is then calculated as:

  $\begin{array}{l}r=\sqrt{r^2}\\ =\sqrt{0.861}\\ =0.928\end{array}$

Thus, the option (d) is the correct option.