Question 3 The Bank of Canada is interested in studying the relationship between mortgage rates and median home prices. The data is provided below Year Interst rate Median home price 1988 10.30 183,800 1989 10.30 183,200 1990 10.10 174,900 1991 9.30 173,500 1992 8.40 172,900 1993 7.30 173,200 1994 8.40 173,200 1995 7.90 169,700 1996 7.60 174,500 1997 7.60 177,900 1998 6.90 188,100 1999 7.40 203,200 2000 8.10 230,200 2001 7.00 258,200 2002 6.50 309,800 2003 5.80 329,800 2004 5.80 431,000 2005 5.80 515,000 2006 6.40 537,000 2007 6.30 496,000 2008 6.00 352,000 2009 5.00 232,000 2010 4.70 291,700 2011 4.40 262,900 2012 3.60 299,200 2013 4.00 321,200 2014 4.10 373,500 2015 3.80 358,100 2016 3.60 382,500 2017 4.00 402,900
Question 3
The Bank of Canada is interested in studying the relationship between mortgage rates and
|
Year |
Interst rate |
Median home price |
|
1988 |
10.30 |
183,800 |
|
1989 |
10.30 |
183,200 |
|
1990 |
10.10 |
174,900 |
|
1991 |
9.30 |
173,500 |
|
1992 |
8.40 |
172,900 |
|
1993 |
7.30 |
173,200 |
|
1994 |
8.40 |
173,200 |
|
1995 |
7.90 |
169,700 |
|
1996 |
7.60 |
174,500 |
|
1997 |
7.60 |
177,900 |
|
1998 |
6.90 |
188,100 |
|
1999 |
7.40 |
203,200 |
|
2000 |
8.10 |
230,200 |
|
2001 |
7.00 |
258,200 |
|
2002 |
6.50 |
309,800 |
|
2003 |
5.80 |
329,800 |
|
2004 |
5.80 |
431,000 |
|
2005 |
5.80 |
515,000 |
|
2006 |
6.40 |
537,000 |
|
2007 |
6.30 |
496,000 |
|
2008 |
6.00 |
352,000 |
|
2009 |
5.00 |
232,000 |
|
2010 |
4.70 |
291,700 |
|
2011 |
4.40 |
262,900 |
|
2012 |
3.60 |
299,200 |
|
2013 |
4.00 |
321,200 |
|
2014 |
4.10 |
373,500 |
|
2015 |
3.80 |
358,100 |
|
2016 |
3.60 |
382,500 |
|
2017 |
4.00 |
402,900 |
a) Estimate a simple linear regression model and find the value of the parameters for the estimation of mortgage rates and the median home price.
b) Interpret the intercept and the slope coefficients.
c) State the
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