Question

For this, problem, please include the excel procedure you used to arrive at an answer (screenshots, explanation, actual file, etc.).

Brokerage	Overall Satisfaction with Electronic Trades	Satisfaction with Trade Price	Satisfaction with Speed of Execution
Scottrade, Inc.	3.5	3.4	3.4
Charles Schwab	3.4	3.2	3.3
Fidelity Brokerage Services	3.9	3.1	3.4
TD Ameritrade	3.7	2.9	3.6
E*Trade Financial	2.9	2.9	3.2
(Not listed)	2.7	2.5	3.2
Vanguard Brokerage Services	2.8	2.6	3.8
USAA Brokerage Services	3.6	2.4	3.8
Thinkorswim	2.6	2.6	2.6
Wells Fargo Investments	2.3	2.3	2.7
Interactive Brokers	4.0	3.7	4.0
Zecco.com	2.5	2.5	2.5
Firstrade Securities	4.0	3.0	3.0
Banc of America Investment Services	2.0	4.0	1.0

The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with electronic trades handled by discount brokers. As part of the survey, members were asked to rate their satisfaction with the trade price and the speed of execution, as well as provide an overall satisfaction rating. Possible responses (scores) were no opinion (0), unsatisfied (1), somewhat satisfied (2), satisfied (3), and very satisfied (4). For each broker, summary scores were computed by computing a weighted average of the scores provided by each respondent. A portion the survey results follow (AAII web site, February 7, 2012).

A. Develop an estimated regression equation using trade price and speed of execution to predict overall satisfaction with the broker. Interpret the coefficient of determination.

B. Use the t test to determine the significance of each independent variable. What are your conclusions at the 0.05 level of significance?

C. Interpret the estimated regression parameters. Are the relationships indicated by these estimates what you would expect?

D. Finger Lakes Investments has developed a new electronic trading system and would like to predict overall customer satisfaction assuming they can provide satisfactory service levels (3) for both trade price and speed of execution. Use the estimated regression equation developed in part (a) to predict overall satisfaction level for Finger Lakes Investments if they can achieve these performance levels.

E. What concerns (if any) do you have with regard to the possible responses the respondents could select on the survey

Answer 1

(A)Satisfaction(y)=-0.78348+0.557957*Price(x1) +0.734175*speed(x2)

coefficient of determination R²=0.6827, is proportion of variation explained by the model in the dependent/response variable

(B) both the predictor/independent variables are significant as their p-value is less than typical alpha=0.05

(C) Yes, there is positive correlation of predictor variable with the response variable.

(D) for x1=3, x2=3, Satisfaction(y)=-0.78348+0.557957*3 +0.734175*3=3.0929

yes,  Finger Lakes Investments if they can achieve these performance levels.

following regression analysis information has been generated using ms-excel

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.826272
R Square	0.682726
Adjusted R Square	0.62504
Standard Error	0.410845
Observations	14
ANOVA
	df	SS	MS	F	Significance F
Regression	2	3.99541	1.997705	11.83517	0.001811
Residual	11	1.856733	0.168794
Total	13	5.852143
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	-0.78348	0.942279	-0.83147	0.42339	-2.85742	1.290466
Price(x1)	0.557957	0.23317	2.392919	0.035677	0.044753	1.071161
speed(x2)	0.734175	0.155738	4.714163	0.000635	0.391398	1.076953

Satisfaction(y)=-0.78348+0.557957*Price(x1) +0.734175*speed(x2)