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Calculate Standard Error And Finding Statistical Significance For The Given Data

Question

In 1974, the Franklin National Bank failed. Franklin was one of the 20 largest banks in the nation, and at the time, the largest ever to fail. Could Franklin’s weakened condition have been detected in advance by simple data analysis? The table below gives the total assets (in billions 2 of dollars)and net income (in millions of dollars) for the 20 largest banks in 1973, the year before Franklin failed.

Franklin is bank number19.

Bank

Assets

Income

1

49.00

218.8

2

42.3

265.6

3

36.3

170.9

4

16.4

85.9

5

14.9

88.1

6

14.2

63.6

7

13.5

96.9

8

13.4

60.9

9

13.2

144.2

10

11.8

53.6

Bank

Assets

Income

11

49.0

42.9

12

42.3

32.4

13

36.3

68.3

14

16.4

48.6

15

14.9

32.2

16

14.2

42.7

17

13.5

28.9

18

13.4

40.7

19

13.2

13.8

20

11.8

22.2

(a) We expect banks with more assets to earn higher income. Make a scatter plot of these data that displays the relation between assets and income.3 Mark Franklin (Bank 19) with a separate symbol or color.

(b) Describe the overall pattern of your plot. Are there any banks with unusually high or low income relative to their assets? Does Franklin stand out from other banks in your plot?

(c) In a regression line for income as a function of assets, what would you expect the sign of the slope to be?

(d) What is the slope and its standard error? Is this relationship statistically significant at the 0.05 level?

 

Summary

The question belongs to Statistics and it discusses about calculation of standard error and finding statistical significance at 0.05 level for the given data.

Total Word Count 252

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