Interest rates and mortgages The correlation of a plot of mortgages in the United States (in thousands of dollars) versus the interest rate at various times over the past 26 years is r = XXXXXXXXXXThe...

Interest rates and mortgages The correlation of a plot of mortgages in the United States (in thousands of dollars) versus the interest rate at various times over the past 26 years is r = -0.86. The mean mortgage amount is $121.8 thousand and the mean interest rate is 7.74%. The standard deviations are $47.36 thousand for mortgage amounts and 1.79% for the interest rates.

a) Is a regression model appropriate for predicting mortgage amount from interest rates? Explain.

 b) What is the equation that predicts mortgage amount from interest rates?

c) What would you predict the mortgage amount would be if the interest rates climbed to 13%?

 d) Do you have any reservations about your prediction in part c?

e) If we standardized both variables, what would be the regression equation that predicts standardized mortgage amount from standardized interest rates?

 f) If we standardized both variables, what would be the regression equation that predicts standardized interest rates from standardized mortgage amount?