The American Association of Individual Investors (AAII) On-Line Discount Broker
ID: 3172619 • Letter: T
Question
The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with electronic trades handled by discount brokers. As part of the survey, members were asked to rate their satisfaction with the trade price and the speed of execution, as well as provide an overall satisfaction rating. Possible responses (scores) were no opinion (0), unsatisfied (1), somewhat satisfied (2), satisfied (3), and very satisfied (4). For each broker, summary scores were computed by computing a weighted average of the scores provided by each respondent. A portion the survey results follow.
Brokerage Satisfaction with
Trade Price Satisfaction with
Speed of Execution Overall Satisfaction with
Electronic Trades AA 3.4 3.1 3.4 BB 3 3.3 3.3 CC 3.1 3.3 4 DD 2.8 3.5 3.7 EE 2.9 3.2 2.9 FF 2.4 3.2 2.7 GG 2.6 3.8 2.6 HH 2.4 3.8 3.4 II 2.6 2.6 2.7 JJ 2.3 2.7 2.3 KK 3.7 3.9 4 LL 2.5 2.5 2.5 MM 3 3 3 NN 4 1 2
Explanation / Answer
A)The regression equation is : y_hat = 0.5458 x1 + 0.6765 x2
The coefficient of determination is 0.72961
Note : the regression equation is obtained using R as regq=lm(y~x1+x2,data=data)
B) if trade price level is 2 and the speed of execution level is 2, them we hve to predict the overall satisfaction level. So, from (a)
Y_hat = 0.5458*2 + 0.6765*2 = 2.446
Sorry, but i wasnt able to upload the imge !!
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