Answer:
(A). Covariance= 267.7777, correlation = 0.281.
(B) there is slight increase in the credit score.
Explanation:
So, we are given the following data for Income and FICO:
39 = 625, 27 = 600, 57 = 710, 31 = 595, 34 = 610, 50 = 840, 38 = 726, 62 = 710, 43 = 635, 49 = 560.
The fastest way to find the covariance and correlation is making use of excel.
Fx = COVARIANCE.P(first row of income: last row of income, first row of FICO: last row of FICO).
With the formula above in Excel we will have the value of 267.7777 as our answer for covariance.
For correlation: we will make use of excel too by making use of the formula below:
Fx = CORREL( first row of FICO: last row of FICO, first row of income: last row of income).
(B). The more the income Increases, the more the credit score increases, although it is a slight Increament.
