Question

iti lance level of 411101ch A mann issues wedit cards to its customers. A main factor in determining whether a widit card will be profitable to re bann is te averase month 14 balance that the customer will maintain on the card that will be subullt to finance charges. Band analysts wish to be termine whether there is a relationship between te the average month14 Wedit card balance and the income stated on te original, Wedit card application form accompanying table contains the sample data that have been collected existing credit care instomers. use x=0.0 where needer 1 The from

Answer 1

a. Deepndent variable is income. and independent variable is credi card balance (Option d)

b. Scatter plot - Option A

There appears to be a negative relationship between x and y

c. r (Using Excel function CORREL(Credit card balance, income)) = -0.540

H₀: ρ = 0, H_A: ρ ≠ 0 (Option A)

Test statistic: t = r*((1-r*r)/(n-2))^0.5 = -0.54*((1-(-0.54^2)/(15-2))^0.5 = -0.126

Critical value (Using Excel function T.INV.2T(probability,n-2)) = T.INV.2T(0.01,13) = 3.012

Rejection region: If t < -t_0.01 = -3.012

Since the test statistic does not lie in the rejection region, fail to reject the null hypothesis. The data does not support linear relationship.