Question

A major financical institution would like to predict its loan degault rate

based on the interest rate it charges. A random sample of eight loans

showed the following rates and default rates:

Interest Default Rate

Rate % per 1000 Loans

(X) (Y)

5.0 36

4.6 38

4.0 33

6.5 44

6.0 46

5.5 37

4.5 34

5.0 35

The regression line to explain 'Default Rate' from 'Interest Rate' has been

calculated as:

y=12.3562 + 4.96717x

You may use the following sums and sums of squares and cross products:

{x=41.1 {y=303 SS(x)=4.75875 SS(y)=154.875 SS(xy)=23.6375

Provide a 90% prediction interval for the default rate per 1000 loans when

teh interest rate is 5.5%

WORK DONE:

Y=12.3562 + 4.96717x

Y=(Xo=5.5)=12.3562 + 4.96717 * 5.5=39.675635

a 90% prediction interval for the default rate per 1000 loans is:

Y (Xo) plus/minus t6;_____(I DONT KNOW HOW TO GET THE VALUE FOR THIS)

This is where i get stuck. I dont know how to get the value nor how to

continue. I tihnk its one of the tables but i dont know which one.

Pls help.

Thanks in advance.

A major financical institution would like to predict its loan degault rate

based on the interest rate it charges. A random sample of eight loans

showed the following rates and default rates:

Interest Default Rate

Rate % per 1000 Loans

(X) (Y)

5.0 36

4.6 38

4.0 33

6.5 44

6.0 46

5.5 37

4.5 34

5.0 35

The regression line to explain 'Default Rate' from 'Interest Rate' has been

calculated as:

y=12.3562 + 4.96717x

You may use the following sums and sums of squares and cross products:

{x=41.1 {y=303 SS(x)=4.75875 SS(y)=154.875 SS(xy)=23.6375

Provide a 90% prediction interval for the default rate per 1000 loans when

teh interest rate is 5.5%

WORK DONE:

Y=12.3562 + 4.96717x

Y=(Xo=5.5)=12.3562 + 4.96717 * 5.5=39.675635

a 90% prediction interval for the default rate per 1000 loans is:

Y (Xo) plus/minus t6;_____(I DONT KNOW HOW TO GET THE VALUE FOR THIS)

This is where i get stuck. I dont know how to get the value nor how to

continue. I tihnk its one of the tables but i dont know which one.

Pls help.

Thanks in advance.

Last edited: