Distinguish between regression analysis and correlation analysis…


a) Distinguish between regression analysis and correlation analysis (Marks: 5) b) The management of a building society in Darwin would like to know how house sales vary with interest rates. The following table shows the average home mortgage interest rates and corresponding number of house sales within the community during ten randomly selected months. Number of houses sold Interest rate (’00) (Y) (average %) (X) 11 14 23 12 38 11.5 45 10.5 9 15 30 11 16 13 18 13.5 39 11 41 11.9? Y = 270? X = 123.4? XY = 3172.4? Y 2 = 8882? X 2 = 1542.36 you have been employed by the Society’s management to examine the relationship between house sales and interest rates using regression analysis. Carry out an appropriate analysis and write a report to management stating and interpreting your findings, and indicating any limitations of the analysis. (Marks: 15) c) How many houses would be sold if the interest rate was 5 percent per annum? Explain any reservations you might have about this prediction (use 95 percent confidence level).
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