Question

Below are data on FICO scores and home loan rates of 10 randomly selected individuals who applied for home loans at a particular bank on a given day. If appropriate, calculate the interest rate for an individual with a FICO score of 710.

FICO score	610	720	715	730	720	680	690	650	740	650
Interest rate (%)	8.1	6.5	6.5	6.0	6.1	7.5	7.8	7.5	6.3	8.1

a.	19.2
b.	29
c.	31.7
d.	6.74

Answer 1

The statistical software output for this problem is:

From above output,

Predicted Interest rate = 19.24 - 0.02*710 = 6.74

Option D is correct.