Please read each question carefully.

In answering, please show your detailed analysis

and calculations in a well-structured and clear way. Please show in details your steps
of solving the problems, list relevant formulas used, hypotheses (if you assume as
required), essential calculations, etc. Relevant and only relevant Excel outputs
should be copied and pasted into your Word file, to support your analysis. Partial
points will be deducted if you do not show your steps in solving the problems.

Please answer all questions in One Microsoft Word file.

For calculation, please use precision level at least three digits after the decimal point.

Use D = 0.05 significance level for statistical analyses and tests.

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I. Regression Analysis Case:

A small credit union is conducting analysis on its loan amounts (measured in US $’s)
issued. A ten-year historical record for the loan amount and other relevant variables are
contained in the dataset “Credit Union.xls”. Besides the variable of our interest which is
“LoanAmount” (the dependent variable), quarterly records of two independent variables
are included in the dataset, which are

1. Members: number of credit union members

2. Income: median household income level (in $1,000’s) in the region

Now use the data given, and with significance level of D = 0.05, applying Regression
modeling procedure:

[Note: You must provide the outputs from regression analysis.]

(a). Construct a multiple linear regression model using “Members” and “Income” as
independent variables, based on regression outputs, write down your model estimate in
its correct format.
Note: You must provide the outputs from Excel regression analysis module.

(b). Interpret the meaning of regression coefficient(s)’ estimate(s) in the previous model
you identified.

(c). Using Global-F test, check the overall significance of the regression model you
identified in (a).

(d). What is the R2 of the regression model? Interpret its meaning.

(e). Assuming for the next (future) quarter, it is known that Members will grows to be
5500 and the Income level will increase to be 79 (in $1,000’s), calculate a point estimate
of the LoanAmount for the next quarter.

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