Sample correlation between returns on assets

Reference no: EM1396523

An analyst believe that the only significant determinant of banks' return on assets (Y) is the ratio of loans to deposits (X). For a random sample of banks the sample regression line

Yhat = 0.97 + 0.57X

1.72 2.04 T statistics

was obtained with the coefficient of determination 0.720.

a. Find the sample correlation between returns on assets and the ratio of loans to deposits.

b. Interpret the intercept and slope of the estimated regression line.

c. Interpret the coefficient of determination

d. Test the null hypothesis that the slope of the population regression line is 0 against the alternative that the true slope is not equal to zero, and interpret your results.

Reference no: EM1396523

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