Question

Barclay's manager of Financial Service wants to find out the relationship between the number of client contacts and the dollar amount of sales ($ thousands). She recorded the amount of sales ($ thousands) last month from ten randomly selected clients. The results from the Regression are presented below:

y^=1.4606x-6.5321;R2=0.735

1. What are the Independent and Dependent Variables?

Independent variable:  

Dependent variable:  

2. What is the value of the correlation coefficient? Interpret it.

3. What % of the variation in the amount of sales can be explained by the variation in the number of contacts? ( 2 marks)

Estimate the amount of sales ($) if 40 contacts are made using the regression equation. Do not round the answer

Answer 1

(a)

Question:

1. What are the Independent and Dependent Variables?

Independent variable:   the number of client contacts

Dependent variable:   the dollar amount of sales ($ thousands).

(b)

Question:

What is the value of the correlation coefficient? Interpret it.

Correlation coefficient = r =

Since Correlation coefficient = r = 0.8573 ispositive and near1, we conclude:

There is a strong direct relationship between the number of client contacts and the dollar amount of sales ($ thousands).

(c)

Since Coefficient of Dtermination = R2 = 0.735 = 73.5%, we conclude:

% of the variation in the amount of sales can be explained by the variation in the number of contacts is 73.5%