Fit the model of part a to the data and evaluate

Reference no: EM131111279

Best's Review (June 1999) compared the mortgage loan portfolios for a sample of 25 life health insurance companies. The information in the table on page 629 is extracted from the article. Suppose you want to model the percentage of problem mortgages - (y) of a company as a function of total mortgage loans (x₁), percentage of invested assets (x₂), percentage of commercial mortgages (x₃), and percentage of residential mortgages (x₄).

a. Write a first-order model for E(y).

b. Fit the model of part a to the data and evaluate its overall usefulness. Use a = .05.

c. Interpret the P estimates in the fitted model.

d. Construct scattergrams of y versus each of the four independent variables in the model. Which variables warrant inclusion in the model as second order (i.e., squared) terms?

Reference no: EM131111279

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