Question: An analyst at a large credit card bank is looking
An analyst at a large credit card bank is looking at the relationship between customers’ charges to the bank’s card in two successive months. He selects 150 customers at random, regresses charges in March ($) on charges in February ($), and finds an R2 of 79%. The intercept is $730.20, and the slope is 0.79. After verifying all the data with the company’s CPA, he concludes that the model is a useful one for predicting one month’s charges from the other. Examine the data on the CD and comment on his conclusions.
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