1) a) Family Size => Discrete

The number of people in the household is always positive integer

b) Location => Nominal

There is four category in location : 1=southwest (SW) sector, 2=northwest (NW) sector,
3=northeast (NE) sector and 4=southeast (SE) sector. All of this category is equal.

c) Ownership => Nominal

There is two category in ownership : 0=rent home, 1=own home. All of this category is equal.

d) Income => Continuous

income is not an integer

e) Monthly Payment => Continuous

Monthly Payment is not an integer

5)
a) Central location
The central location in this curve is at a small value which is at interval $500-$699.

b) Variation
The variation of this curve is more pill up in smaller value. There are indications of outliers at
large values.

c) Shape.
Shape of rent payment is skewness +.

7. Refer to Tables 6a - c in Question 6 to answer the following:

a) (i) What is the proportion of households that make a monthly rent payment?

proportion of households that make a monthly rent payment is 43,60%

(ii) What is the percentage of households that make a monthly mortgage payment and are from
the NW sector?

Percentage of households that make a monthly mortgage payment and are from the NW sector is
21,20%

b) If a household was randomly selected from those who pay a monthly mortgage, what is the
probability that they are located in the NE sector?

If a household was randomly selected from those who pay a monthly mortgage, probability that
they are located in the NE sector is

P( NE Sector ∩ Monthly Mortage) 10,8 %

P ( NE Sector| Monthly Mortage ¿= = =19,15 %
P(Monthly Mortage) 56,4 %
Or we can see at table 6b

c) For the households located in the SE sector, what is the proportion that pays monthly rent?
 P(S E Sector ∩ Monthly Rent ) 13,2%
P ( Monthly Rent| SE sector ¿= = =55 %
P(SE sector) 24 %
Or we can see at table 6c

d) In the process of investigating if a household ownership is independent of the location,

(i) the probability of household paying monthly mortage is supposed to be equal to the
probability of a household paying monthly rent given it is located in the NE sector? What are
these two probabilities?

In NE sector, probability of monthly mortage is 10,80% and probability of monthly rent is 13,20%.
The value is not too far, so we can say that the probability of household paying monthly mortage
is equal with probability of a household paying monthly rent given it is located in the NE sector

(ii) based on these probabilities, state if the ownership and location are independent and why?

To answer this question we can test with chi square test with hypothesis :

H 0 :ownership∧location are independent

H 1 : ownership∧location are not ∈dependent

2
2 ( Oij −Eij )
χ=
Eij

¿ computer calculations , we get χ 2=107,82

χ 2tab = χ 2α ;(c−1)(r−1)= χ 20,05 ;3=7,8 15

Base on this test, we can conclude that ownership and location are not independent
8)

Chart 8
$2,500

$2,000
Monthly Payment

$1,500

$1,000

$500

$0
$0 $50,000 $100,000 $150,000 $200,000
Income

b) Form Chart 8, we can see that the plot make a positive slope, so relationship between
Monthly payment and Annual income from the scatterplot is positive.

c)
Correlation of the relationship between Monthly payment and Annual income is 0,405. It
means that relationship between Monthly payment and Annual income from the scatterplot
is moderate and positive.

9)

b) Write down the estimated linear regression equation

^y =658,014+0,0048 X

c) State and interpret the estimated y-intercept

β 1=0,0048
Intrepret : If annual income increases $1000, so monthly payment will increase $4,8

d) State and interpret the estimated slope

β 0=658,014
Intrepret : If there is no annual income or annual income = 0, so monthly payment is
$658,014

10)
b) Write down the mean value (3 decimal places only)
Mean = 978,47

c) Interpret the mean value

average monthly mortgage payment or rent payment is $978,47

d) State and interpret the 99% confidence interval

937,45< x́ <1019,49

with 99% confidence level, average monthly mortgage payment or rent payment will be at
interval $937,45 until $1019,49

e) Without calculations compare the precision between the 95% and 99% confidence
intervals
Because of standard error for 99% is higher than 95%, so 95% confidence interval is
narrower than a 99% confidence interval which is wider. The 99% confidence interval is
more accurate than the 95%. So, 99% confidence intervals will be more precise than 95%.

f) Apart from the confidence level, state and explain other factors that affect the precision of
this confidence interval.

Formula to get confidence interval is :

S
CI =x́ ± Z α
2 √n
So, factors that affect the precision of this confidence interval is total sample, varians
sample, and confidence level.