Open the Datafile “Insurance Premiums”. Set up a multivariate regression model to estimate annual...

Question

Open the Datafile “Insurance Premiums”. Set up a multivariate regression model to estimate annual auto insurance premiums using the provided data set.

1. What are the values for coefficient of determination, standard error and the F-value of the regression? Is your regression statistically significant? Explain.

2. Write the estimated equation. Are the estimated parameters statistically significant? Reports the value of the test statistic for each independent (explanatory) variable.

3. What is the estimated annual premium in a county with 21.5 claims per thousand vehicles and an estimated average dollar cost of $10,105 per claim.

4. Based on what you have learned so far, do the assumptions of regression hold in this case?

insurance-premiums-ql3jxpvd.xlsx

Suraj · Accepted Answer

Regression Analysis
We are given the data set of the insurance premium. The data set contains three columns claims, costs, and annual premium. The annual premium is the dependent variable and the two other variables are the independent variables. 
In this task, we are interested in building a multiple regression model to predict the annual premium using other two variables. Hence, the regression model is developed using the MS-Excel. 
The answers regarding the multiple regression are given as follows:
Answer 1: 
The coefficient of determination is also called R-square value. The values are taken from the following two outputs tables:
Thus, from the first table the coefficient of determination or R square value is 0.9116. This value indicates that the two independent variables explain about 91.16% variation in the dependent variable annual premium. Hence, this model appears to be very significant.
The standard error of the model is 13.2972. Thus, the meaning of the standard error is that on average how much the predicted values are deviate from their original values. Since, the standard error is appearing small. Hence, we can say that the model is a good fit.
The F-value for the regression model is taken from the second table that is the ANOVA table. The f-value is 87.

Open the Datafile “Insurance Premiums”. Set up a multivariate regression model to estimate annual auto insurance premiums using the provided data set. 1. What are the values for coefficient of...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment