Credit Balance Case
Essay Preview: Credit Balance Case
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1. Credit Balance vs. Size
According to the graphs, there is a positive correlation between size and the credit balance. This means that the larger the size, the higher the credit balance. This is evidenced by the fact that the scatter plots we graphed showed a “best fit” line that is positive. This positive line indicates that credit balance varies directly with size.
2. Equation of the best Fit Line
The equation of the “best fit” line is Y = 2591 + 403 (x)
3. Coefficient of correlation
There is a correlation of .75. This correlation is considered to be a strong positive correlation between size and the credit balance. This correlation indicates that when the size increases, the credit balance does too. And it also means that when the credit balance increases, the size increases also.
4. Coefficient of determination
The coefficient of determination is 55.6%. This means that the variation of the credit balance is determined by the linear relationship between size and credit balance. The variance of the credit balance is explained 56.6% by the size.
5. The utility of the regression model
There are two potential outcomes: H0, which is that the regression model is not significant, or Ha, where the regression model is significant. We test the model by determining if the P-value is less than or greater than α. Since the P-value is 0, we can reject the null hypothesis.