An analysis of spending by a sample of credit card bank cardholders shows that spending by cardholders in January (Jan) is related to their spending in December ( Dec):
The assumptions and conditions of the linear regression seemed to be satisfied and an analyst was about to predict January spending using the model shown below:
Jan = $612.07 + 0.403 Dec
Another analyst worried that different types of cardholders might behave differently. She examined the spending pat-terns of the cardholders and placed them into five market Segments. When she plotted the data using different colors and symbols for the five different segments, she found the following:
Look at this plot carefully and discuss why she might be worried about the predictions from the model
Jan = $612.07 + 0.403 Dec.

  • CreatedMay 15, 2015
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