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# A life insurance company wishes to examine the relationship

### Customer Question

A life insurance company wishes to examine the relationship between the amount of life insurance held by a family and family income. From a random sample of 20 households, the company collected the date in the fileinsur.dat. The data are in units of thousands of dollars.
(a) Estimate the linear regression with dependent variable insurance and independent variable income. Write down the fitted model and draw a sketch of the fitted function. Identify the estimated slope and intercept on the sketch. Locate the point of the means on the plot.
(b) Discuss the relationship you estimated in (a). In particular,
(i) What is your estimate of the resulting change in the amount of life insurance when income increases by \$1,000?
(ii) What is the standard error of the estimate in (i), and how do you use this standard error for interval estimation and hypothesis testing?
(C) One member of the management board claims that for every \$1,000 increase in income, the amount of life insurance held will go up by \$5,000. Choose an alternative hypothesis and explain your choice. Does your estimated relationship support this claim? Use a 5% significance level.
(d) Test the hypothesis that as income increases the amount of life insurance increases by the same amount. That is , test the hypothesis that the slop of the relationship is one.
(e) Write a short report (200-250 words) summarizing your findings about the relationship between income and the amount of life insurance held.
A. Regress insurance income.
Submitted: 1 year ago.
Expert:  Ryan replied 1 year ago.

Hi,

Thank you for using the site. I'll be happy to help you with this. Can you please post the data file that goes with this project?

Thanks,

Ryan