MRA Output Questions

Q. 4 Following table shows financial data of banking sector. The data include return capital (%)(
Variable name :return), sales (in millions $), Operating margin (%) and Debt to Capital (%) all
pertaining to same latest 12 months for which the data were available for that company.
The OUTPUT of the analysis is given below

REGRESSION /DESCRIPTIVES MEAN STDDEV CORR SIG N /MISSING LISTWISE

/STATISTICS COEFF OUTS CI(95) R ANOVA COLLIN TOL /CRITERIA=PIN(.05)
POUT(.10) /NOORIGIN /DEPENDENT Return_on_Capital /METHOD=STEPWISE Sales
Operating_Margin Debt_to_Capital /PARTIALPLOT ALL /SCATTERPLOT=(*ZRESID
,*ZPRED) /RESIDUALS DURBIN HIST(ZRESID) NORM(ZRESID).

Regression
[DataSet3] D:\NMIMS Stats\Advanced Stats\Banking Sector data.sav
Descriptive Statistics

Mean Std. Deviation N

Return_on_Capital 18.8937 9.05674 63
Sales 5960.8730 7065.61834 63
Operating_Margin 22.4397 11.04427 63
Debt_to_Capital 25.0165 19.97353 63
Correlations

Return_on_Capital Sales Operating_Margin Debt_to_Capital

Pearson Correlation Return_on_Capital 1.000 .202 .198 -.474
Sales .202 1.000 .094 -.133
Operating_Margin .198 .094 1.000 -.245
Debt_to_Capital -.474 -.133 -.245 1.000
Sig. (1-tailed) Return_on_Capital . .056 .060 .000
Sales .056 . .231 .149
Operating_Margin .060 .231 . .026
Debt_to_Capital .000 .149 .026 .
N Return_on_Capital 63 63 63 63
Sales 63 63 63 63
Operating_Margin 63 63 63 63
Debt_to_Capital 63 63 63 63
 Variables Entered/Removeda
Mode Variables
l Variables Entered Removed Method
1 Debt_to_Capital . Stepwise (Criteria:
Probability-of-F-to-enter <=
.050, Probability-of-F-to-
remove >= .100).
a. Dependent Variable: Return_on_Capital
Model Summaryb
R
Sq
Mode ua Adjusted R
l R re Square Std. Error of the Estimate Durbin-Watson
1 .474a .2 .212 8.04088 1.841
24
a. Predictors: (Constant), Debt_to_Capital
b. Dependent Variable: Return_on_Capital
ANOVAb
Sum of
Model Squares df Mean Square F Sig.
1 Regression 1141.515 1 1141.515 17.655 .000a
Residual 3944.002 61 64.656

Total 5085.517 62
a. Predictors: (Constant), Debt_to_Capital
b. Dependent Variable: Return_on_Capital

Coefficientsa
Unstandardized Standardized 95.0% Confidence Collinearity
Coefficients Coefficients Interval for B Statistics
Lower Upper
Model B Std. Error Beta t Sig. Bound Bound Tolerance VIF
1 (Constant) 24.268 1.632 14.873 .000 21.005 27.531

Debt_to_ -.215 .051 -.474 -4.202 .000 -.317 -.113 1.000 1.000
Capital
a. Dependent Variable: Return_on_Capital
Excluded Variablesb
Collinearity Statistics
Partial Minimum
Model Beta In t Sig. Correlation Tolerance VIF Tolerance
1 Sales .142a 1.250 .216 .159 .982 1.018 .982
Operating_Margin .087a .747 .458 .096 .940 1.064 .940
a. Predictors in the Model: (Constant), Debt_to_Capital
b. Dependent Variable: Return_on_Capital
Collinearity Diagnosticsa
Model Eigenvalue Condition Index Variance Proportions
 Variables Entered/Removeda
Mode Variables
l Variables Entered Removed Method
1 Debt_to_Capital . Stepwise (Criteria:
Probability-of-F-to-enter <=
.050, Probability-of-F-to-
remove >= .100).
Dimensi
on (Constant) Debt_to_Capital
1 1 1.784 1.000 .11 .11
2 .216 2.873 .89 .89
a. Dependent Variable: Return_on_Capital
Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 10.1322 24.2679 18.8937 4.29087 63
Residual -14.16789 23.29918 .00000 7.97577 63
Std. Predicted Value -2.042 1.252 .000 1.000 63
Std. Residual -1.762 2.898 .000 .992 63
a. Dependent Variable: Return_on_Capital
Charts
Answer Following Questions ( 10 Marks)
a. State the multiple regression equation.
b. Interpret the meaning of each of the slopes.
c Can you use the equation for prediction? Explain.
d. Find 95% Confidence interval for Return if Sales = 2000 Million $, Margin = 60% and Debt to
Capital = 60%
f. Determine the coefficient of multiple determinations and interpret its meaning.
g. State the assumptions of Regression
Q.2 A bank has collected data on 15 credit card transaction (during a month) of itsHNI
customers. The bank wants to launch a new credit card reward point scheme and wants to
estimate the amount spent on the basis of monthly number of transactions and monthly
income. The Data file and output are given below.

The variables are, Amount

spent in ‘000 in a month
(Amtspent), number of
transactions in a month
(transactions), Whether been
abroad (Abroad)( 1 = been
abroad in the month, 0 =not
been abroad in the month)
and monthly income in ‘000
in a month (Income)

Regression
 Variables Entered/Removed

Variables
Model Variables Entered Removed Method

1 income in 000, . Enter

location,
transactionsa

a. All requested variables entered.

Model Summaryb

Adjusted R Std. Error of the

Model R R Square Square Estimate Durbin-Watson

1 .995a .989 .986 5.769 1.966

a. Predictors: (Constant), income in 000, location, transactions

b. Dependent Variable: Amt spent in '000

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 33346.057 3 11115.352 333.974 .000a

Residual 366.103 11 33.282

Total 33712.160 14

a. Predictors: (Constant), income in 000, location, transactions

b. Dependent Variable: Amt spent in '000

a
Coefficients

Standardized
Unstandardized Coefficients Coefficients 95.0% Confidence Interval for B Collinearity Statistics

Model B Std. Error Beta T Sig. Lower Bound Upper Bound Tolerance VIF

1 (Constant) 13.426 7.563 1.775 .103 -3.219 30.071

transactions 2.112 .815 .256 2.592 .025 .318 3.907 .400 2.500

location 4.368 .167 .445 5.845 .004 7.004 15.740 .346 2.888

income in 000 .372 .052 .713 7.215 .000 .259 .486 .500 2.000

a. Dependent Variable: Amt spent in '000

Interpret the output. Mention the Regression equation.
The regression equation is
Amount spent = 13.426 + 2.112*transactions + 4.368*location + 0.372*Income

Comment(giving reasons)on if the regression model can be used for prediction.

Yes the model can be used for prediction as

1)All variables are quantitative or binary

2) All quantitve variables are normally distributed ( as K-S test significance value is >0.05 for all
variables hence null hypothesis that they are normal is accepted)
3)coefficient of determination R2 is high (.989)
4)Durban Wattson stats For autocorrelation is 1.966 which is within the required range of 1.5 to 2.5, indicating no
threat of autocorrelation
5) ANOVA is rejected ( Sig value 0.000) indicating atleast one independent variable is related to the dependent
variable.
6)All individual 's are rejected
7) Since the normal plot for residuals shows that the points are around the diagonal, the residuals are normally
distributed
8) The Partial grapg shows that the independent variables have linear relationship with the dependent variable.
9) the scatter plot shows no threat of heteroscadascity
State null and alternate hypothesis & interpretation of the hypothesis wherever necessary.
Interpret the meaning of each of the slopes.
a
Coefficients

Standardized
Unstandardized Coefficients Coefficients 95.0% Confidence Interval for B Collinearity Statistics

Model B Std. Error Beta T Sig. Lower Bound Upper Bound Tolerance VIF

1 (Constant) 13.426 7.563 1.775 .103 -3.219 30.071

transactions 2.112 .815 .256 2.592 .025 .318 3.907 .400 2.500

location 4.368 .167 .445 5.845 .004 7.004 15.740 .346 2.888

income in 000 .372 .052 .713 7.215 .000 .259 .486 .500 2.000

a. Dependent Variable: Amt spent in '000

Does the regression coefficient b0 has any practical meaning in the context of this problem?
Why?
If the model can be used, estimate amount spent by a customer for the next month, if his
estimated transactions are 30, his monthly income is 400000, and he is going to go abroad in
the next month.
Also find 95% confidence interval for the same.

Upper bound Lower limit

b b Point estimate
1 30.071 1 -3.219 1 13.426
30 3.907 30 0.318 30 2.112
1 15.74 1 7.004 1 4.368
400 0.486 400 0.259 400 0.372
357.421 116.925 229.954

Meaning of Each Slope (Unstandardized Coefficients "B"):

Transactions (B = 2.112):
For each additional transaction, the amount spent increases by 2.112 thousand units (or ₹2,112 if units are ru

Location (B = 4.368):
A 1-unit improvement/change in location score (e.g., moving to a better location) increases the amount spen

Income in 000 (B = 0.372):

For every increase of ₹1,000 in income, the amount spent increases by 0.372 thousand units (i.e., ₹372).

Constant (B = 13.426):
When transactions, location, and income are zero, the predicted amount spent would be 13.426 thousand un