A B C D E F G H I

1 Mortgage interest rates and home prices

2 Median home price
3 X VARIABLE Y VARIABLE r= 0.608194047981399
$350,000
4 30-year mortgage
5 Year interest rate (%) Median home price
6 1988 10.30 $300,000
$183,800
7 1989 10.30 $183,200
8 1990 10.10 $174,900
$250,000 f(x) = − 23080.9239908541 x + 388862.250785307
9 1991 9.30 $173,500 R² = 0.369862062880448
10 1992 8.40 $172,900
11 1993 7.30 $173,200
$200,000
12 1994 8.40 $173,200
13 1995 7.90 $169,700
$150,000
14 1996 7.60 $174,500
15 1997 7.60 $177,900
16 1998 6.90 $188,100
$100,000
17 1999 7.40 $203,200
18 2000 8.10 $230,200
19 $50,000
2001 7.00 $258,200
20 2002 6.50 $309,800
21 2003 5.80 $329,800 $0
22 Average 7.75 $180,550 5.00 6.00 7.00 8.00 9.00 10.00 11.00

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27
28 To install Analysis ToolPak:
29 1. Click on Excel logo at the top right hand corner or go to the File menu
30 2. Select Excel Options.
31 3. Click Add-Ins.
32 4. Select Analysis ToolPak if it isn't selected already.
33 5. Click Go.
34
35 To create a scatter plot with a regression line:
36 1. With your cursor, select the range from cells B5 to C20.
37 2. Click on Insert and Scatter. A scatter chart will be generated.
38 3. On the scatter chart, right click on any point in the chart.
39 4. Choose "Add Trend Line."
40 5. Select "Linear," "Display Equation on Chart" and "R-Squared Value on Chart."
41
42 To generate more exhaustive diagnostics:
43 1. Click on Data, "Data Analysis," and then select "Regression."
44 2. In the Input Y Range, select C5:C20.
45 3. In the Input X Range, select B5:B20.
46 4. Under Output Options, choose "New Worksheet Ply," then click OK.
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.608163
R Square 0.369862
Adjusted R Sq 0.327853
Standard Error 40812.2
Observations 17

ANOVA
df SS MS F Significance F
Regression 1 1.47E+10 1.47E+10 8.804312 0.009592
Residual 15 2.5E+10 1.67E+09
Total 16 3.96E+10

Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%
Upper 95.0%
Intercept 388862.3 63305.44 6.142635 1.883E-05 253929.9 523794.6 253929.9 523794.6
interest rate ( -23080.92 7778.672 -2.967206 0.009592 -39660.77 -6501.076 -39660.77 -6501.076
 Demand estimation using linear regression

Y X1 X2 X3
City Number of weekly riders Price per week Population of city Monthly income of riders
1 192,000 $15.00 1,800,000 5800.00
2 190,400 $15.00 1,790,000 6200.00
3 191,200 $15.00 1,780,000 6400.00
4 177,600 $25.00 1,778,000 6500.00
5 176,800 $25.00 1,750,000 6550.00
6 178,400 $25.00 1,740,000 6580.00
7 180,800 $25.00 1,725,000 8200.00
8 175,200 $30.00 1,725,000 8600.00
9 174,400 $30.00 1,720,000 8800.00
10 173,920 $30.00 1,705,000 9200.00
11 172,800 $30.00 1,710,000 9630.00
12 163,200 $40.00 1,700,000 10570.00
13 161,600 $40.00 1,695,000 11330.00
14 161,600 $40.00 1,695,000 11600.00
15 160,800 $40.00 1,690,000 11800.00
16 159,200 $40.00 1,630,000 11830.00
17 148,800 $65.00 1,640,000 12650.00
18 115,696 $102.00 1,635,000 13000.00
19 147,200 $75.00 1,630,000 13224.00
20 150,400 $75.00 1,620,000 13766.00
21 152,000 $75.00 1,615,000 14010.00
22 136,000 $80.00 1,605,000 14468.00
23 126,240 $86.00 1,590,000 15000.00
24 123,888 $98.00 1,595,000 15200.00
25 126,080 $87.00 1,590,000 15600.00
26 151,680 $77.00 1,600,000 16000.00
27 152,800 $63.00 1,610,000 16200.00
average 160,026 $49.93

Regression Preparation
1. Are there outliers in the data? NONE
Generate the linear regression of the data above.
1. Are all independent variables valid? If not what are the invalid independent variables?
2. What is the correlation coefficient?
3. What is the regression equation?
3. How will you interpret the equation?
 X4
Average parking rates per month Zscores x1 Zscores x2 Zscores x3 Zscores x4
$50.00 -1.2642 1.77 -1.54 -1.26
$50.00 -1.2642 1.62 -1.42 -1.26
$60.00 -1.2642 1.47 -1.36 -1.04
$60.00 -0.9022 1.44 -1.34 -1.04
$60.00 -0.9022 1.03 -1.32 -1.04
$70.00 -0.9022 0.88 -1.31 -0.82
$75.00 -0.9022 0.66 -0.84 -0.71
$75.00 -0.7212 0.66 -0.72 -0.71
$75.00 -0.7212 0.59 -0.66 -0.71
$80.00 -0.7212 0.37 -0.55 -0.60
$80.00 -0.7212 0.44 -0.42 -0.60
$80.00 -0.3593 0.29 -0.14 -0.60
$85.00 -0.3593 0.22 0.08 -0.49
$100.00 -0.3593 0.22 0.16 -0.16
$105.00 -0.3593 0.15 0.22 -0.04
$105.00 -0.3593 -0.74 0.22 -0.04
$105.00 0.5456 -0.59 0.46 -0.04
$110.00 1.8848 -0.67 0.57 0.07
$125.00 0.9076 -0.74 0.63 0.40
$130.00 0.9076 -0.89 0.79 0.51
$150.00 0.9076 -0.96 0.86 0.95
$155.00 1.0885 -1.11 1.00 1.06
$165.00 1.3057 -1.33 1.15 1.28
$175.00 1.7401 -1.26 1.21 1.50
$175.00 1.3419 -1.33 1.33 1.50
$190.00 0.9800 -1.18 1.44 1.83
$200.00 0.4732 -1.03 1.50 2.05

NO, THE INVALID INDEPENDENT VARIABLES ARE: POPULATION OF THE CITY, MONTHLY INCOME OF RIDERS AND THE AVERA
0.966
y=197208.341-744.75*price per week
For each unit increase in price per week, the number of weekly riders decreases by 744.75

Number of weekly riders

250,000

200,000

f(x) = − 744.748674039542 x + 197208.341207604

R² = 0.933065049321059
150,000
 Number of weekly riders
250,000

200,000

f(x) = − 744.748674039542 x + 197208.341207604

R² = 0.933065049321059
150,000

100,000

50,000

0
15.00 25.00 35.00 45.00 55.00 65.00 75.00 85.00 95.00 105.00 115.00
 X1 Y
Price per week Number of weekly riders
15.00 192,000
15.00 190,400
15.00 191,200
25.00 177,600
25.00 176,800
25.00 178,400
25.00 180,800
30.00 175,200
30.00 174,400
30.00 173,920
30.00 172,800
40.00 163,200
40.00 161,600
40.00 161,600
40.00 160,800
40.00 159,200
65.00 148,800
102.00 115,696
75.00 147,200
75.00 150,400
75.00 152,000
80.00 136,000
86.00 126,240
98.00 123,888
87.00 126,080
77.00 151,680
63.00 152,800

Y INCOME OF RIDERS AND THE AVERAGE PARKING RATES PER MONTH

105.00 115.00
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.97236434 correlation c
R Square 0.94549242
Adjusted R Square 0.93558195
Standard Error 5406.37017
Observations 27

ANOVA
df SS MS F Significance F
Regression 4 11154120959.19 2.79E+09 95.403389 1.43862E-13
Residual 22 643034444.664 29228838
Total 26 11797155403.85

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept 100222.561 135917.8740468 0.737376 0.4686859 -181653.858 382098.97909
Price per week -689.52272 95.40286728315 -7.227484 3.0523E-07 -887.37616 -491.66928576
Population of city 0.05494128 0.072339148634 0.759496 0.4556178 -0.09508093 0.2049634921
Monthly income of ride -1.3013669 1.627450021412 -0.799636 0.4324717 -4.67649164 2.0737579022
Average parking rates 152.456367 73.86296236669 2.064043 0.0510037 -0.7260411 305.63877563

y=100222.6-689.523*price per week+0.0549*population of the city -1.301*monthlyincome of riders+1

For earch unit increase in price per week, the number of weekly riders decreases by 689.52
For each unit increase in population of the city, the number of weekly riders increases by 0.055
For each unit increase in monthly income of riders, the number of weekly riders decreases by 1.301
For each unit increase in average parking rates, the number of weekly riders increases by 152.456
 y=100222.6-689.523* price per week

Lower 95.0% Upper 95.0%

-181653.8578 382098.97909
-887.3761599 -491.66928576 3E-07 <0.05 valid x
-0.095080932 0.2049634921 0.45556 <0.05 invalid x
-4.676491635 2.0737579022 0.43247 <0.05 invalid x
-0.726041104 305.63877563 0.051 <0.05 invalid x

01*monthlyincome of riders+152.457*average parking rates

ecreases by 689.52
ders increases by 0.055
y riders decreases by 1.301
ders increases by 152.456
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.96595292
R Square 0.93306505
Adjusted R Square 0.93038765
Standard Error 5620.11393
Observations 27

ANOVA
df SS MS F Significance F
Regression 1 11007513389 11007513389 348.49695 3.4134E-16
Residual 25 789642015.109 31585680.6043
Total 26 11797155404

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept 197208.341 2266.48105907 87.0108048856 1.467E-32 192540.43609 201876.25
Price per week -744.748674 39.8942447019 -18.668073042 3.413E-16 -826.912409 -662.58494
 regression equation

y=197208.341-744.75*price per week

Lower 95.0% Upper 95.0%

192540.436 201876.246
-826.912409 -662.584939