Problem:
The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with discount brokers. As part of the survey, members were asked to rate the quality of the speed of execution with their broker as well as provide an overall satisfaction rating for electronic trades. 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 calculating a weighted average of the scores provided by each respondent. A portion of the survey results follow (AAII website, February 7, 2012).
|
Brokerage
|
Speed
|
Satisfaction
|
|
Scottrade, Inc.
|
3.4
|
3.5
|
|
Charles Schwab
|
3.3
|
3.4
|
|
Fidelity Brokerage Services
|
3.4
|
3.9
|
|
TD Ameritrade
|
3.6
|
3.7
|
|
E*Trade Financial
|
3.2
|
2.9
|
|
Vanguard Brokerage Services
|
3.8
|
2.8
|
|
USAA Brokerage Services
|
3.8
|
3.6
|
|
Thinkorswim
|
2.6
|
2.6
|
|
Wells Fargo Investments
|
2.7
|
2.3
|
|
Interactive Brokers
|
4.0
|
4.0
|
a. Develop a scatter diagram for these data with the speed of execution as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Develop the least squares estimated regression equation.
d. Provide an interpretation for the slope of the estimated regression equation.
e. Suppose Zecco.com developed new software to increase their speed of execution rating. If the new software is able to increase their speed of execution rating from the current value of 2.5 to the average speed of execution rating for the other 10 brokerage firms that were surveyed, what value would you predict for the overall satisfaction rating?