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Question: The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls memb...

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The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with discount brokers. As part of the survey, members were asked to rate the quality of the speed of execution with their broker as well as provide an overall satisfaction rating for electronic trades. 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 calculating a weighted average of the scores provided by each respondent. A portion of the survey results follow (AAII website, February 7, 2012).

Brokerage	Speed of execution	Satisfaction
Scottrade, Inc.	3.4	3.5
Charles Schwab	3.3	3.4
Fidelity Brokerage Services	3.4	3.9
TD Ameritrade	3.6	3.7
E*Trade Financial	3.2	2.9

We want to predict "Satisfaction" using "Speed of execution".

Question: Suppose that a broker named wells Fargo Investments has an execution speed of 2.7. What is your prediction for the expected satisfaction for this broker?

Answer 1

y =  −2.973 + 1.909⋅ 2.7

y = 8.1273