Seasonal spending part 2 financial analysts know that, Ask an Expert

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Seasonal spending, part 2. Financial analysts know that January credit card charges will generally be much lower than those of the month before. What about the difference between January and the next month? Does the trend con- tinue? The data set on the DVD contains the monthly credit card charges of a random sample of 99 cardholders.

a) Build a regression model to predict February charges from January charges.

b) How much, on average, will cardholders who charged $2000 in January charge in February?

c) Give a 95% confidence interval for the average February charges of cardholders who charged $2000 in January.

d) From part c, give a 95% confidence interval for the av- erage decrease in the charges of cardholders who charged $2000 in January.

e) What reservations, if any, do you have about the confi- dence intervals you made in parts c and d?

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