The dodge city bank is planning its loans for the next, Ask an Expert

Economics

The Dodge City Bank is planning its loans for the next several years, and is using a model of loan demand developed from past experience. Fred Smith is responsible for developing the mortgage loan component of total loan demand. Fred estimates the following equation using 14 years of data:

Q = 50 - 0.5P + 0.6Y + 0 .2H,
R2 = .844 (17) (0.13) (0.08) (.06) Number of observation (N) = 14

Here, Q denotes mortgage loan demand (in $ millions), P denotes the prime interest rate (%), Y is per capita income ($ thousands), and H is an index of average city housing prices ($ thousands). The standard error of a coefficient is shown in each parenthesis.

a. Interpret the each coefficient except for the intercept.

b. Test the overall statistical significance of the regression equation at 95 % confidence. And interpret your result.

c. Test the statistical significance of each individual right-hand variable at 95 % confidence. And interpret your results.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9681458

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