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Regression Analysis Problem unemployment rate and residential mortgage rate

Use linear regression to determine if there is a statistical correlation between the unemployment rate and the residential mortgage bank-charge off rate. Answer the following questions.

Table 1. Quarterly Unemployment
Rate1996 - 2006
Year Q1 Q2 Q3 Q4
1996 5.53 5.5 5.27 5.33
1997 5.23 5 4.86 4.67
1998 4.63 4.46 4.53 4.43
1999 4.3 4.26 4.23 4.06
2000 4.03 3.93 4 3.9
2001 4.23 4.4 4.83 5.5
2002 5.7 5.83 5.73 5.87
2003 5.87 6.13 6.13 5.83
2004 5.7 5.6 5.43 5.4
2005 5.27 5.07 4.9 4.97
2006 4.73 4.63 4.7 4.47
Source: Bureau Labor Statistics (2006)

Table 2. Residential Mortgage
Charge-Off Rates 1996-2006
Year Q1 Q2 Q3 Q4
1996 .12 .1 .09 .09
1997 .1 .1 .09 .09
1998 .09 .08 .07 .07
1999 .1 .11 .14 .14
2000 .13 .12 .11 .14
2001 .15 .17 .44 .19
2002 .17 .17 .14 .14
2003 .16 .16 .12 .33
2004 .14 .11 .09 .08
2005 .09 .08 .08 .06
2006 .1 .09 .11 unk
Source: Federal Reserve (2006)
A. Calculate the Correlation Coefficient
B. Calculate the Coefficient of Determination
D. Coefficient Test of Significance
E. Calculate the Least Squares Regression Line
F Calculate the Confidence and Prediction Intervals for the Dependent Variable
G. Create an ANOVA Table

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Solution Summary

The solution uses regression analysis to draw a relationship between unemployment rate and mortgage rates.

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