A large national bank charges local companies for using their services. A bank o

Question

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 charge 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: E(Y) = 0 + 1X The results of the simple linear regression are provided below. Y = -2,700 + 20X, SYX = 65, two-tail p value of 0.034 (for testing 1) Interpret the estimate of 0, the Y-intercept of the line.

A- All companies will be charged at least $2,700 by the bank.

B- There is no practical interpretation since a sales revenue of $0 is a nonsensical value.

C-About 95% of the observed service charges fall within $2,700 of the least squares line.

D-For every $1 million increase in sales revenue, we expect a service charge to decrease $2,700.

Explanation / Answer

When x= 0 , corresponding y value is the y intercept,

In this case putting x= 0, y value is 2700

Thus answer is (a)

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