Many factors affect the price of wine, including such qualitative characteristics as the variety of grape, location of the winery, and label. Researchers developed a regression model considering two quantitative variables: the tasting score of the wine and the age of the wine (in years) when released to the market. They found the following regression equation, with an $R^2$ of $65 \%$, to predict the price (in dollars) of a bottle of wine. Price $=6.25+1.22$ Tasting Score $+0.55 \mathrm{Age}$

One of these interpretations is accurate. Which is it? Describe what is wrong with the others.

a) The minimum price for a bottle of wine that has not aged is $\$ 6.25$.

Industry sector and outsourcing. Many companies have selected to outsource segments of their business to external providers in order to cut costs and improve quality and/or efficiencies. Common business segments that are outsourced include Information Technology (IT) and Human Resources (HR). The data below display the types of outsourcing decisions made (no outsourcing, IT only, HR only, both IT and $\mathrm{HR}$ ) by a sample of companies from various industry sectors.

Do these data highlight important differences in outsourcing by industry sector?

d) Test an appropriate hypothesis and state your results.

A household appliance manufacturer wants to examine the relationship between total sales and the company's three primary means of advertising (television, magazines, and radio). All values were in millions of dollars. They encountered the following regression equation.

Sales $=250+6.75 T V+3.5$ Radio $+2.3$ Magazine

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

d) Sales increase on average about $\$ 6.75$ million for each million spent on TV, after allowing for the effects of the other kinds of advertising.

A household appliance manufacturer wants to examine the relationship between total sales and the company's three primary means of advertising (television, magazines, and radio). All values were in millions of dollars. They encountered the following regression equation.

Sales $=250+6.75 T V+3.5$ Radio $+2.3$ Magazine

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

c) Every million dollars spent on magazines increases TV spending by $\$2.3$ million.

A household appliance manufacturer wants to examine the relationship between total sales and the company's three primary means of advertising (television, magazines, and radio). All values were in millions of dollars. They encountered the following regression equation.

Sales $=250+6.75 T V+3.5$ Radio $+2.3$ Magazine

One of the following interpretations is correct. Which is it? Describe what's wrong with the others. n. b) Every million dollars spent on the radio makes sales increase by $\$3.5$ million, all other things being equal.

You have heard that if you leave your money in mutual funds for a longer period of time, you will see a greater return. So you would like to compare the 3-year and 5-year returns of a random sample of mutual funds to see if indeed, your return is expected to be greater if you leave your money in the funds for 5 years. An investor now informs you that if you leave your money for as long as 10 years, you will see an even greater return, so you would like to compare the 5-year and 10-year returns of a random sample of mutual funds to see if your return is expected to be greater if you leave your money in the funds for 10 years.

c) Test the hypothesis and find the $\mathrm{P}$-value if suitable.

A household appliance manufacturer wants to examine the relationship between total sales and the company's three primary means of advertising (television, magazines, and radio). All values were in millions of dollars. They encountered the following regression equation.

Sales $=250+6.75 T V+3.5$ Radio $+2.3$ Magazine

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

a) If they did no advertising, their income would be $\$ 250$ million.

Many factors affect the price of wine, including such qualitative characteristics as the variety of grape, location of the winery, and label. Researchers developed a regression model considering two quantitative variables: the tasting score of the wine and the age of the wine (in years) when released to the market. They found the following regression equation, with an $R^2$ of $65 \%$, to predict the price (in dollars) of a bottle of wine. Price $=6.25+1.22$ Tasting Score $+0.55 \mathrm{Age}$

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

d) After allowing for the age of a bottle of wine, a wine with a one-unit higher tasting score can be expected to cost about $\$ 1.22$ more.

Many factors affect the price of wine, including such qualitative characteristics as the variety of grape, location of the winery, and label. Researchers developed a regression model considering two quantitative variables: the tasting score of the wine and the age of the wine (in years) when released to the market. They found the following regression equation, with an $R^2$ of $65 \%$, to predict the price (in dollars) of a bottle of wine. Price $=6.25+1.22$ Tasting Score $+0.55 \mathrm{Age}$

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

c) For a unit increase in tasting score, the price of a bottle of wine increases by about $\$ 1.22$.

Many factors affect the price of wine, including such qualitative characteristics as the variety of grape, location of the winery, and label. Researchers developed a regression model considering two quantitative variables: the tasting score of the wine and the age of the wine (in years) when released to the market. They found the following regression equation, with an $R^2$ of $65 \%$, to predict the price (in dollars) of a bottle of wine. Price $=6.25+1.22$ Tasting Score $+0.55 \mathrm{Age}$

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

b) This model fits $65 \%$ of the points exactly.

Many factors affect the price of wine, including such qualitative characteristics as the variety of grape, location of the winery, and label. Researchers developed a regression model considering two quantitative variables: the tasting score of the wine and the age of the wine (in years) when released to the market. They found the following regression equation, with an $R^2$ of $65 \%$, to predict the price (in dollars) of a bottle of wine. Price $=6.25+1.22$ Tasting Score $+0.55 \mathrm{Age}$

One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

a) Each year a bottle of wine ages, its price increases by about $.55.

A regression was conducted to predict the selling Prices of houses in dollars from their Area in square feet, Lot size in square feet, and Age in years. The $R^2$ is $92 \%$. The equation from this regression is shown here.

Price $=169,328+35.3$ Area $+0.718$ Lot size $-6543$ Age One of the following interpretations is correct. Which is it? Describe what's wrong with the others.

d) This model fits $92 \%$ of the data points exactly.

What is the future value of $3,100 in 17 years assuming an interest rate of 8.4 percent compounded semiannually?

Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 17.1 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? Explain why this rate is misleading to an uninformed borrower.