The following table presents interest rates, in percent, for 30-year and 15-year

Question

The following table presents interest rates, in percent, for 30-year and 15-year fixed rate mortgages, fot December, 2012 (4 pts) 30-Year 15-Year 30-Year 15-Year 3.92 3.20 3.55 2.85 3.89 3.16 3.60 2.86 3.95 3.20 3.47 2.78 3.14 3.38 2.69 3.803.03 3.35 2.66 3.68 2.953.35 2.66 3.91 (a) Construct a scatterplot of the 15-year rate (v) versus the 30-year rate (z) (b) Compute the correlation coefficient between 30-year and 15-year rates. If you use your calculator to obtain a "fast" result, write down the calculator steps you used to obtain your answer. (c) When the 30- (d) Which of the following is the best interpretation of the year rate is below average, would you expect the 15-year rate to be above or below average? Explain correlation coefficient? When a bank increases the 30-year rate, that causes the 15-year rate to rise as well. . Interest rates are determined by economic conditions. When economic conditions cause 30-year rates to increase, these same conditions cause 15-year rates to increase as well. When a bank increaes the 15-year rate, that causes the 30-year rate to rise as well.

Explanation / Answer

(a) please find the image of scatter plot

(b)corrilation coefficient=r=covarianc(30year,15year)/sqrt(variance(30year)*variance(15year))=0.0454/sqrt(0.0508*0.0409)=0.996

using ms-excel or calculator

find the variance of each and covariance between 30year and 15 year

(c)No, the correlaion is positive . so one is increasing other will also increase and vice-versa.

so if one is below the average another will also below the average and vice-versa

(d) second choice, interest rate are determind by..............................

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.