A car insurance company would like to examine the relationship between the driving experience and insurance premium. For this reason, a random sample of ten drivers is taken and the years of driving...

1. A car insurance company would like to examine the relationship between the driving experience and insurance premium. For this reason, a random sample of ten drivers is taken and the years of driving experience (x) as well as the monthly insurance premium (y in $) is recorded.

The data are shown in the table below.

            The summary statistics for these data are:

1. Draw a scatter diagram of these data on the graph paper. Label the diagram carefully.


2. Calculate the sample correlation coefficient (using the formula for correlation coefficient). Interpret your findings

iii. Calculate the least squares line of y on x and draw the line on the scatter diagram (y=a+bx₁)

1. Interpret the intercept and slope (b/coefficient of x variable).

iv. Based on the regression equation in part (iii), what will be the predicted monthly insurance premium for a driver with 12 years of experience? Will you trust this value? Justify your answer.

Extracted text: Sum of x data : 127 Sum of the squares of x data : 2033 Sum of the squares of y data Sum of y data : 562 :33662 Sum of products of x and y data: 6402


Extracted text: Driver 2 3 4 5 6 7 8 9 10 Driving experience(x) 6. 11 10 15 6. 25 16 15 20 Insurance 66 88 51 70 44 56 42 60 45 40 premium (y)