The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with electronic trades handled by discount brokers. As part of the survey, members were asked to rate their satisfaction with the trade price and the speed of execution, as well as provide an overall satisfaction rating. 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 computing a weighted average of the scores provided by each respondent. A portion of the survey results follows (AAII website, February 7, 2012).

a. Develop an estimated regression equation using trade price and speed of execution to predict overall satisfaction with the broker.
b. Finger Lakes Investments has developed a new electronic trading system and would like to predict overall customer satisfaction assuming they can provide satisfactory levels of service levels (3) for both trade price and speed of execution. Use the estimated regression equation developed in part (a) to predict overall satisfaction level for Finger Lakes Investments if they can achieve these performance levels.
c. Develop a 95% confidence interval estimate of the overall satisfaction of electronic trades for all brokers that provide satisfactory levels of service for both trade price and speed of execution.
d. Develop a 95% prediction interval of overall satisfaction for Finger Lakes Investments assuming they achieve service levels of 3 for both trade price and speed ofexecution.

  • CreatedFebruary 16, 2015
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