Here\'s a plot showing the interest rate on a 3-month bond from 1950 to 1980, an
ID: 3243786 • Letter: H
Question
Here's a plot showing the interest rate on a 3-month bond from 1950 to 1980, and a regression model fit to the relationship between the Rate (in and Years since 1950. Complete parts a through d. a) What is the correlation between rate and year? (Round to two decimal places as needed.) b) Interpret the slope and intercept on average, interest rates during this period v at about per year, starting from an interest rate of about (Round to two decimal places as needed.) (Round to the nearest integer as needed.) d Would you expect this prediction to be accurate? Explain. O A. Yes R? 377 0% is large enough for the extrapolation to be safe. O B. Not really Interest rates are too random to predict for a time. O c. Not really Extrapolating 30 years beyond the end ofthese data would be dangerous and unlikely to be accurate. O D. Yes, 30 years beyond the end of these data is close enough to be a safe estimate,Explanation / Answer
a)8.77
b) 0.269725 ( 0.27%) 0.01%
c)
Rate(in year x) = 0.010590 + 0.269725(x-1950)
Thus, for year 2010,
Rate of interest = 0.010590 + 0.269725(2010-1950)
= 16.19 %
= 16 %
d)