Question

A bank developed a model for predicting the average checking and savings accuont balance as balance = -17,732 + 367 x age + 1,300 x years education + 0.116 x household wealth.a. Explain how to interpret the numbers in this model.b. Suppose that a customer is 32 years old, is a college graduate (so that years educaiton = 16) and has a household wealth of $150,000. What is the predicted bank balance?

Answer 1

Answer:

The variables in the model are explained thus:

-17732 probably depicts estimated average withdrawal by an account holder but without a time horizon

367*age represents the deposits envisaged from a banking customer considering their age

1300*years education is the additional deposits over and the above the initial deposits considering the level of education of the account holder

0.116*household means that 11.6% of household wealth is likely to be kept with the bank as deposits.

The predicted bank balance is $32212

Explanation:

Considering  a 32 year old customer,with college education of 16 years and household wealth of $150000,the predicted bank balance is calculated below:

Predicted balance=-17732+367*32+1300*16+0.116*$150000

                               =$32212