Part I

a) Obtain the descriptive statistics for the number of bedrooms by the price if the house.
Price of the house

Number of bedrooms

Mean
Standard Error
Median
Mode
Standard Deviation
Sample Variance

221.1028571
4.597016762
213.6
188.3
47.10540443
2218.919126

Mean
Standard Error
Median
Mode
Standard Deviation
Sample Variance

3.8
0.146635028
4
4
1.502561915
2.257692308
-

Kurtosis
Skewness
Range
Minimum
Maximum
Sum
Count

-0.276800639
0.474013451
220.3
125
345.3
23215.8
105

Kurtosis
Skewness
Range
Minimum
Maximum
Sum
Count

0.199838427
0.660884776
6
2
8
399
105

b) Create frequency distributions and draw appropriate diagrams for the price of the houses
and number of bedrooms, separately.
no.

of Frequenc
1

bedrooms
1
2
3
4
5
6
7
8
9

y
0
24
26
26
11
14
2
2
0

Histogram
30
25
20
Frequency

15
10
5
0
1

no. of bedrooms

Part II
By using correlation and regression analysis in Excel, display the output for number of
bedrooms by the price of the house. Your analysis should include a scatter plot of the data
(complete with best fit line and explanation of the graph). Assess the statistical significance
of the correlation coefficient. Develop the statistical model for this analysis.
2

SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error

0.46807461
0.219093841
0.211437898
41.87016078

Observations

104

coefficient of corelation which is small r

coefficient of determination

ANOVA
Significance
Regression
Residual

df
1
102

SS
50169.61284
178817.2571

Total

103

228986.8699

MS
50169.613
1753.1104

F
28.61749

F
5.43248E-07

Standard

Lower

Intercept

Coefficients
165.1761008

Error
11.16158841

t Stat
14.79862

P-value
3.84E-27

Lower 95%
143.0371437

Upper 95%
187.31506

95.0%
143.037144

X variable 1

14.61869752

2.732706148

5.3495315

5.43E-07

9.198387982

20.039007

9.19838798

Scatter plot

price of bedroom's number.

400
350
300
250
200
price of the house
150
100
50
0
1

no. of bedrooms

X, independent variable: number of bedrooms

Y, dependent variable: price of the house

Comment:
There is a positive relationship between the number of bedrooms and the price of the house.
When the number of bedrooms increase, then price of the house will increase, and vice versa.

Statistical significance of the correlation coefficient

Coefficient of correlation, r = 0.46807461

Ho : P = 0 (no correlation exist)
Ha: P 0 (correlation exist)

Significance level = 0.05

Degree of freedom, d.f = 9-2=7
Decision rule: reject Ho if t < - 2.3646 or t > 2.3646
r
2
Test statistics : t= 1r
n2
T=

0.46807461
10.219093841

= 1.4014
Since t test statistics = 1.4014 > 2.3646, do not reject Ho

Conclusion: there is sufficient evidence to show that there is no correlation exist

between the number of bedrooms and the price oh house at 5% significance value.

Regression equation
= a + bx
5

Price of houses (RM 000) = 165.1761008 + 14.61869752 number of bedrooms

Interpretation:
Y intercept: the initial of price houses is RM165176.1008
Slope: if number of bedrooms increase by 1 bedroom, then the price will increase by
RM14618.69752

Significance of the model

Ho: = 0 (no linear relationship between number of bedrooms and price of the house)
6

Ha: 0 (there is a linear relationship between number of bedrooms and price of the
house)

Significance level = 0.05

Degree of freedom, d.f = 9-2 = 7
Decision rule: reject Ho if t < - 2.3646 or t > 2.3646

The test statistics is calculated using:

14.618697520
t=
2.732706148
= 5.3495315

Since t test statistics =5.3485 > 2.3646, reject Ho

Conclusion: : there is sufficient evidence to show that there is a linear relationship

between the number of bedrooms and the price oh house at 5% significance value.

Part III
Write a report about your investigation. Give brief introduction of your data (including the
variables).Interpret your results from part I and II. All the graphs given above should be
interpreted as well. [Hint: include the best measure of location and spread]. Comment on the
practical significance of your analysis from part B. Based on your investigation, do you think
7

the assumed independent variable explain well your dependent variable? What are the other
possible factors affecting your dependent variable? Discuss any limitations you have
regarding using this technique for your investigation.
There is a report for my investigation about this case. First of all, when talk about this
chapter, first thing we have to know about the independent which is X and dependent variable
which is Y. In this investigation the independent variables is the number of bedrooms and
dependent variable is the price of the house. In part I question a there is a descriptive statistics
for the number of bedrooms by the price of the house. In that table, there have the mean,
mode, median, standard deviation, the skewness and vice versa. In b question, they have to
create frequency distribution and draw a appropriate diagram. I have draw the histogram
through the frequency table. The histogram diagrams show the frequency of the number of
bedrooms. The distribution of this case is right skewed which is the mean > median. The best
measure of location in this investigation is the media and the best measure of dispersion is the
interquartile range.
In part II, the there are a summary output of the numbers of bedroom and the price of
the house. Multiple R is coefficient of correlation which is small r and R square is coefficient
of determination. The scatter plot of the price of numbers bedroom show there is a positive
relationship between the number of bedrooms and the price of the house. When the number
of bedrooms increase, then price of the house will increase, and vice versa. The other possible
factors affecting my dependent variable which is the price of the house is economic growth,
interest rate, and the consumer confidence.

.
Part IV
Regression is use to predict the value of a dependent variable based on the value of at
least 1 independent variable (regression equation). Correlation analysis is used to measure
strength of the linear relationship between 2 variable.
8

Linear regression can be used in business to evaluate tends and make estimates or
forecasts. For example, if a companys sale has increased steadily every month for past few
years, conducting a linear analysis on the sales on the Y-axis and time on the X-axis would
produce a line that depicts the upward trend in sales. After creating the trend line, the
company could use the slope of the line tp forecast sales in future months.
A simple example of correlation analysis from everyday life is how much electricity
do we use in balmy spring day as opposed to a rainy winter day? We probably would say that
in sunny day we use less electricity, on a rainy we use artificial light and are more likely to
stay at home. So where we spot correlation in this example? Accordingly to statistics, demand
for rain in given day we use more electricity on rainy day then in sunny day.