The insurance company wants to forecast amount of life insurance held by family heads. Company drew the sample of 6 family heads and secured the given information.
Family Insurance held (000)
A 18
B 20
C 20
D 25
E 30
F 25
i) using only above information make predictive statement of insurance held by all families.
ii) Determine the sum of squared error term (SSEu=E(Yi-Ybar)squared, to estimate goodness of the estimate of insurance held i=1
Now let the given income data for the same six families
Family Income (000)
A 20
B 30
C 45
D 25
E 45
F 50
iii) Determine the least squares regression line such that income is the independent variable (X) and insurance amount is the dependent variable (Y) n.
iv) Calculate the sum of squared error value for the regression model SSEc=E(Yi-Ybar)squared and compare it with value you derived in part b. i=1.