A large national bank charges local companies for using their services. A bank o

Question

A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y)—measured in dollars per month—for services rendered to local companies. One independent variable used to predict service charges to a company is the company's sales revenue (X)—measured in millions of dollars. Data for 21 companies who use the bank's services were used to fit the model:
Yi = 0 + 1Xi + Ei

The results of the simple linear regression are provided below.

Referring to Scenario 13-1, interpret the p-value for testing whether 1 exceeds 0.

There is insufficient evidence (at the = 0.10) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y).

There is sufficient evidence (at the = 0.05) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y).

Sales revenue (X) is a poor predictor of service charge (Y).

For every $1 million increase in sales revenue, you expect a service charge to increase $0.034.

Explanation / Answer

Since p-value is 0.034 < 0.05, we can conclude that there is sufficient evidence (at the = 0.05) to conclude that sales revenue (X) is a useful linear predictor of service charge (Y).

Hence correct Option is B

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