Exercise 01_______________________________________________________________________________ ______ a) Development of a 99 percent confidence interval for the selling prices of the homes.

Answer to the Question no 01(a) Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 01-A

O ne-Sample Statistics N Selling price of the homes 60 Mean 224.0567 Std. Deviation 45.3440 Std. Error Mean 5.8539

From above table we found that Sample Size, N = 60 Sample Mean, X = 224.0567 Sample Standard Deviation, S = 5.8539 Standard Error Mean,

= 5.8539 Table# 01-B

O n e-S am ple Tes t Te st V a lu e = 0 9 9 % C o n fid e n c e In te rva l o f th e D iffe re n ce Lo w e r Up p e r

t S e llin g p ric e o f th e h o m e s 38 .27 5

df 59

Mean S ig . ( 2-ta ile d ) D iffe re n ce .0 0 0

224 .0 5 6 7 20 8 .4 7 5 0 239 .6 38 3

From above table we have got the upper limit and lower limit of the population mean () of selling price of the homes. According to the equation of Confidence interval for the population mean (when is unknown) here,

CI = X t
Interpretation:

99%

S n

= 208.4750 239.6383

Probability of the selling price of the homes range ($208.4750 $239.6383) is 0.99. The mean selling price of the homes of ranges from $208.4750 to $239.6383 and we are 99% confident about it. The interval ($208.4750 $239.6383) contains the population mean with probability 0.99. If we take a sample of selling price of the homes as 100 times, this interval will contain the population 99 times.

b) Develop a 95 percent confidence interval for the mean distance of the homes from the center of the city.

Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 01-C

O ne-Sample Statistics N Distance from the centre of the city 60 Mean 15.0833 Std. Deviation 5.3687 Std. Error Mean .6931

From above table we found that Sample Size, N = 60 Sample Mean, X = 15.0833 Sample Standard Deviation, S = 5.3678 Standard Error Mean,

= 0.6931 Table# 01-D

O n e-S am ple Tes t Te st Va lu e = 0 9 5% C o nfide n ce In te rva l o f the Diffe re nce Low er Up pe r 1 3.6 9 64 16 .4 7 0 2

t D ista n ce from th e cen tre o f th e city 21.7 62

df 59

Me a n Sig. (2-tailed ) Diffe re nce .00 0 1 5.0 833

From above table we have got the upper limit and lower limit of the population mean () of the distance of the homes from the center of the city. According to the equation of Confidence interval for the population mean (when is unknown) here,

S CI = X t = 13.6964 16.4702 n
95%
Interpretation: Probability of the distance of the homes from the center of the city range (13.696416.4702) is 0.95. The mean distance of the homes from the center of the city ranges from 13.6964 to 16.4702 and we are 95% confident about it. The interval (13.6964 16.4702) contains the population mean with probability 0.95. If we take a sample of distance of the homes from the center of the city as 100 times, this interval will contain the population 95 times.

Exercise 02_______________________________________________________________________________ ______

a) A recent article in The Daily Star indicated that mean selling

price of the homes in the city of Dhaka is more than Tk. 220. Can we conclude that mean selling price of the homes is more than Dhaka city is more than 220? Use 0.01significance level. What is the P-value?

Answer to the Question no 02(a)

Step-1: Ho: 220 H1: > 220 Step-2: Level of significance is = 0.01 Step-3: t-Test statistic should be used

Step-4: Formulate the decision rule; If, P-value < value, then Ho will be rejected. If, P-value > value, then Ho will be accepted. Step-5: Making calculation and taking decision, Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow:

Table# 02-A

O ne-Sample Statistics N Selling price of the homes 60 Mean 224.0567 Std. Deviation 45.3440 Std. Error Mean 5.8539

From above table we found that Sample Size, N = 60 Sample Mean, X = $224.0567 Sample Standard Deviation, S = $5.8539 Standard Error Mean,

= 5.8539 Table# 02-B

O n e-S ample Test Test Value = 220 99% Confidence Interval of the Difference Lower Upper -11.5250 19.6383

t Selling price of the homes .693

df 59

Mean Sig. (2-tailed) Difference .491 4.0567

Decision: P-value is 0.491 Since P-value (0.491) > -value (0.01) then Ho is accepted. i.e. 220 Interpretation: No, at 0.01 significance level we cannot conclude that the mean sealing price of homes in Dhaka city is more than $220.
b) The same article reported that the mean size was less than 210

square feet. Can we conclude that the mean size of homes sold in the city is less than 210 square feet? Use the 0.05 significance level. What is P-value?

Step-1: Ho: 210 H1: < 210 Step-2: Level of significance is = 0.05 Step-3: t-Test statistic should be used Step-4: Formulate the decision rule;

If, P-value < value, then Ho will be rejected. If, P-value > value, then Ho will be accepted. Step-5: Making calculation and taking decision; Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 02-C

O ne-Sample Statistics N Area of the home in sq.ft 60 Mean 2215.0000 Std. Deviation 257.6458 Std. Error Mean 33.2619

From above table we found that Sample Size, N = 60 Sample Mean, X = 2215 sq-fe Sample Standard Deviation, S = 257.6458 sq-fe Standard Error Mean,

= 33.2619

Table# 02-D
O n e-S am ple Test Test Value = 210 95% Confiden ce Interval of the Difference Mean Sig. (2-tailed) Difference Lower Upper .000 2005.0 000 1938 .44 30 20 71.5 570

t Area of the home in sq.ft 60 .279

df 59

Decision: P-value is 0.000 Since P-value (0.000) < -value (0.05) then Ho is rejected. So H1 is accepted. i.e. < 210 Interpretation: Yes, at 0.05 significance level we can conclude that the mean size of homes sold in the city is less than 210 square feet.

Exercise 03_______________________________________________________________________________ ______ a) At the 0.05 significance level, can we conclude that there is a difference in the mean selling price of homes with pool and homes without pool?

Step-1: H0: 1 = 2 H1: 1 2 1 = Selling Price of homes with pool 2 = Selling Price of homes without pool

Step-2: Level of significance, = 0.05

Step-3: t-Test statistic should be used. Step-4: Formulate the Decision Rule, If P-value < - value, Ho will be rejected. If P-value > - value, Ho will be accepted. Step-5: Making calculation and taking decision; Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 03-A
Group Statistics Pool No Yes N 21 39 Mean 205.1381 234.2436 Std. Deviation 27.7889 49.8157 Std. Error Mean 6.0640 7.9769

Selling price of the homes

From above table we found that, For homes with pools: Number of pools, N = 39 Sample Mean, X = 234.2436 Sample Standard Deviation, S = 49.8157 = 27.7889 Standard Error Mean, 6.0640 Table# 03-B For homes without pools: Number of pools, N = 21 Sample Mean, X = 205.1381 Sample Standard Deviation, S

= 7.9769

Standard Error Mean,

There are two p-values (0.16 and 0.005) in the table. To choose the correct one we need to do the comparing two population variances hypothesis test. Step-1: Ho: 1 = 2 H1: 1 2 Step-2: Significance level, = 0.05 Step-3: F- Test statistic should be used Step-4: Formulate the Decision Rule, If P-value < - value, Ho will be rejected. If P-value > - value, Ho will be accepted. Step-5: Making calculation and taking decision; 1 = with pool 2 = without pool

From above Table# 03-B we can see that the significance value of Levenes Test for Equality of Variances is 0.12 and the significance values of t-test Equity of Means are 0.19 and 0.007. The probability of P cannot be more than the significance value of Levenes Test for Equality of Variances, or P 0.12. Decision (Comparing Variances): Since, P-value (0.007) < -value (0.05) then H0 is rejected, and H1 is accepted. i.e. 12 So, equal variance cannot be assumed. Decision (Comparing Means): Since, P-value (0.007) < -value (0.05) then H0 is rejected, and H1 is accepted. i.e. 1 2 Interpretation: Yes, at the 0.05 significance level, we can conclude that there is a difference in the mean selling price of homes with pool and homes without pool.

b) At the 0.01 significance level, can we conclude that there is a difference in the mean selling price of homes with an attached garage and homes without an attached garage?

Step-1: H0: 1 = 2 garage. H1: 1 2 garage. Step-2: Level of significance, = 0.01 1 = Selling Price of homes with an attached 2 = Selling Price of homes without an attached

Step-3: t-Test statistic should be used. Step-4: Formulate the Decision Rule, If P-value < - value, Ho will be rejected. If P-value > - value, Ho will be accepted. Step-5: Making calculation and taking decision; Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 03-C

From above table we found that, For homes with an attached garage: attached garage: Number of garages, N = 40 Sample Mean, X = 240.8675 Sample Standard Deviation, S = 43.4748 = 26.8365 For homes without an

Number of garages, N = 21 Sample Mean, X = 190.4350 Sample Standard Deviation, S

Standard Error Mean, 6.0008

= 6.8740

Standard Error Mean,

Table# 03-D

There are two p-values (0.000 and 0.000) in the table. To choose the correct one we need to do the comparing two population variances hypothesis test. Step-1: Ho: 1 = 2 H1: 1 2 Step-2: Significance level, = 0.01 Step-3: F- Test statistic should be used Step-4: Formulate the Decision Rule, If P-value < - value, Ho will be rejected. 1 = with garage 2 = without garage

If P-value > - value, Ho will be accepted. Step-5: Making calculation and taking decision; From above Table# 03-D we can see that the significance value of Levenes Test for Equality of Variances is 0.030 and the both significance values of ttest Equity of Means is 0.000. The probability of P cannot be more than the significance value of Levenes Test for Equality of Variances, or P 0.030. Decision (Comparing Variances): Since, P-value (0.030) > -value (0.01) then H0 is accepted. i.e. 1 = 2 So, equal variance is assumed. Decision (Comparing Means): Since, P-value (0.030) > -value (0.01) then H0 is accepted. i.e. 1 = 2 Interpretation: No, at the 0.01 significance level, we cannot conclude that there is a difference in the mean selling price of homes with an attached garage and homes without an attached garage.

Exercise 04_______________________________________________________________________________ ____

a) At the 0.01 significance level, is there a difference in the

variability of the selling prices of homes that have a pool versus that do not have a pool?

Step-1: Ho: 1 = 2 H1: 1 2 Step-2: Significance level, = 0.01 Step-3: F- Test statistic should be used Step-4: Formulate the Decision Rule, If P-value < - value, Ho will be rejected. If P-value > - value, Ho will be accepted. Step-5: Making calculation and taking decision; Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: 1 = with pool 2 = without pool

Table# 04-A

From above table we found that, For homes with pools: For homes without pools:

Number of pools, N = 39 Sample Mean, X = 234.2436 Sample Standard Deviation, S = 49.81567 Deviation, S = 27.78887 Standard Error Mean, 6.06403 Table# 04-B

Number of pools, N = 21 Sample Mean, X = 205.1381 Sample Standard

= 7.97689

Standard Error Mean,

From above Table# 04-B we can see that the significance value of Levenes Test for Equality of Variances is 0.012 and the significance values of t-test Equity of Means are 0.016 and 0.005. The probability of P cannot be more than the significance value of Levenes Test for Equality of Variances, or P 0.012. Decision: Since, P-value (0.005) < -value (0.01) then H0 is rejected and H1 is accepted. i.e. 1 2 Interpretation: Yes, at the 0.01 significance level, we can conclude that there is a difference in the variability of the prices of homes that have a pool versus homes that do not have a pool.

b) At the 0.05 significance level, is there a difference in the mean

selling prices of homes among five Townships?

Here we assume, 1= Uttara 2= Banani 3= Gulshan 4= Baridhara 5= Nikunjo Step 1: Ho: 1=2=3=4=5 H1: At least one pair will differ. Step 2: Significance Level, = 0.05 Step 3: F- Test statistic will be used Step 4: Formulate the Decision RuleIf P-value< - value, Ho will be rejected. If P-value > - value, Ho will be accepted. Step 5: Making calculation and taking decision; Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow:

Table# 04-C

Decision: Since P-value (0.084) > - value (0.05) then H0 is accepted and H1 is rejected. Interpretation: i.e. 1=2=3=4=5.

No, at 0.05 significance level there is no any difference in the mean selling price of the homes among the five Townships.

Exercise 05_______________________________________________________________________________ _______

a) Write out the regression equation including all the variables

except township. Discuss the variables size of the homes in square feet, distance from the city and garage attached with the homes.

Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 05-A

Regression Equation: Y= a + b1 x1 + b2 x2 + b3 x3 + b4 x4 + b6 x6 + b7 x7 Here, x1 x2 x3 x4 = Number of bedrooms = Area of the home in square feet = Pool = Distance from the center of the city b1 = 8.508 b2 = 31.39 b3 = 19.405 b4 = -2.804

x6 = Garage x7 = Number of bathrooms So regression equation is,

b6 = 27.203 b7 = 5.338 a = 107.796

Y = 107.796 + 8.508 x1 +31.39 x2 + 19.405 x3 + (-2.804) x4 + 27.203 x6 + 5.338 x7 Interpretation:Number of bedrooms: Co-efficient of the number of bedrooms is 8.508. That means if the number of the bedroom is increased by one, then the selling price of the homes will increase by $ 8.508 considering all other factors constant. Area of the homes in square feet: Co-efficient of size of the homes in square feet is 31.39. That means if size of the home is increased by one square feet, the selling price of the homes will increase by $31.39 considering all other factors constant. Pool: Co-efficient of the pool is 19.405. That means if there is a pool attached with the homes then the selling price of the homes will increase by $19.405, considering all other factors constant. Distance from the center of the city: Co-efficient of distance from the center of the city is -2.804. That means if distance from the center of the city is increased by one mile, then the selling price of the homes will decrease by $2.804, considering all other factors constant. Garage: Co-efficient of size of the garage attached is 27.203. That means, if there is garage is attached with the homes then, the selling price of the homes will increase by $ 27.203, considering all other factors constant. Number of bathrooms: Co-efficient of Number of bathrooms is 5.338. That means, if number of bathroom is increased by one, then the selling price of the homes will increase by $5.338 considering all other factors constant.

b) Determine

the value of R2 and multiple regression error.

Interpret

Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow:

Table# 05-B

Determination of R2:

From above table, R2 = (0.751)2 = 0.564001

Interpretation: 56.4% of the total variation in the dependent variable Y (Selling price) is explained by the variation in the independent variables number of bathrooms,

size of home in square feet, garage, pool, number of bedrooms and distance from the center of the city.

c) Develop a correlation matrix. Which independent variables have

strong or weak correlation with the dependent variable? Do you see any problem with multicollinearity? If any how do you solve it? Here, A Correlation matrix is developed by using SPSS software; the output of the solution is given bellow Table# 05-C(i)

##Independent variables correlation with the dependent variable is given bellow##

Table# 05-C(ii)

Correlation of Dependent Variable with Independent Variable Correlatio n 0.486

Variables Selling Price of homes with Number of bedrooms Selling Price of homes Area of the homes in square feet Selling Price of homes Pool Selling Price of homes Distance from the center of the city Selling Price of homes Garage Selling Price of homes Number of bathrooms

Comment It is a weak and positive relationship It is a weak and positive relationship It is a weak and positive relationship It is a moderate inverse relationship It is a moderate positive relationship It is a weak and positive relationship

0.373

0.309

-0.523

0.529

0.269

## Correlation between the Independent Variables is given bellow## Table# 05-C(iii) Correlation between the Independent Variables

Variables Number of bedrooms with area of the home in square feet Number of bedrooms with pool Number of bedrooms with distance from the center of the city Number of bedrooms with garage Area of the home in square feet with pool Area of the home in square feet with distance from the center of the city Area of the home in square feet with number of garage Area of the home in square feet with number of bathrooms Pool with distance from the center of the city Pool with garage attached Pool with number of bathrooms Distance from center of the city with garage Distance from the center of the city with number of bathrooms Garage with the number of bathrooms

Correlatio n 0.352 -0.028 -0.242 0.233 0.235 -0.109 0.028 0.011 -0.107 0.148 0.036 -0.533 -0.286 0.224

Comment Weak positive relationship Weak inverse relationship Weak inverse relationship Weak positive relationship Weak positive relationship Weak inverse relationship Weak positive relationship Weak positive relationship Weak inverse relationship Weak positive relationship Weak positive relationship Weak inverse relationship Weak inverse relationship Weak positive relationship

Multicollinearity Problem: There is no problem of Multicollinearity because all the values of correlations between the independent variables are less than 0.7.
d) Conduct the global test on the set of independent variables.

Interpret.

The global test: The global test on the set of independent variables is given bellow Step 1: H0: 1= 2= 3= 4=5= 6=0 H1: Not all the s are zero Step 2: Significance Level = 0.05 Step 3: F-test statistic will be used. Step 4: Formulate the decision rule:If P-value < - value than Ho will be rejected. If P-value > - value than Ho will be accepted Step 5: Making calculation and taking decision:Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow: Table# 05-D

Decision:

Since P-value (.000) < - value (.05), H0 should be rejected, and H1 is accepted. i.e. Not all the s are zero That is at least one variable has significant effect. This means that the regression model is valid; the independent variables have enough capability to estimate the selling prices of the homes. e) Conduct a test of hypothesis on each of the independent variables. Would you consider deleting any of the variables? If so which ones? Test of hypothesis on each of the independent variables: Test of hypothesis on each of the independent variables is given below Step 1: H0: 1=0, 2=0, 3=0, 4=0, 5=0, 6=0 H1: 10, 20, 30, 40, 50, 60 Step 2: Level of significance, = 0.05 Step 3: t- test statistic will be used. Step 4: Formulate the decision rule:If P-value < - value than Ho will be rejected If P-value > - value than Ho will be accepted Step 5: Here, The statistical problem is solved by using SPSS software; the output of the solution is given bellow:

Table# 05-E