A bank issues credit cards to its customers. A main factor in determining whethe

Question

A bank issues credit cards to its customers. A main factor in determining whether a credit card will be profitable to the bank is the average monthly balance that the customer will maintain on the card that will be subject to finance charges. Bank analysts wish to determine whether there is a relationship between the average monthly credit card balance and the income stated on the original credit card application form. The accompanying table contains the sample data that have been collected from existing credit card customers.

Credit Card Balance ($) Income ($) 46,000 36,000 49,000 56,000 51,000 58,000 29,000 47,000 49,000 39,000 46,000 33,000 32,000 39,000 45,000 407 1,285 1,080 332 81 812 2,157 224 1,264 134 437 827 1,902 384

Explanation / Answer

a) In this case, from Income stated on the original credit card application form we can predict the average monthly credit card balance. Who have low income has high average credit card balance and who have high income has low average credit card balance.

Therefore,

Answer: The dependent variable is the credit card balance and the independent variable is the income.

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