How should the loan officer interpret the coefficient on x₂? A)For an additional 1.3 percent increase in the interest rate,we would expect the total dollar value of residential loans to decrease by $1.0 million,assuming that all the other independent variables in the model are held constant. B)For an additional percent increase in the interest rate,we would expect the total dollar value of residential loans to decrease by $1.3 million on average,assuming that all the other independent variables in the model are held constant. C)For an additional million dollars in loans,we would expect the interest rate to decrease by 1.3 percent,assuming that all the other independent variables in the model are held constant. D)For an additional $1.3 million in loans,we would expect the interest rate to decrease by 1.0 percent on average,assuming that all the other independent variables in the model are held constant.

Question

Quizplus · Accepted Answer

The coefficient on x₂ represents the impact of a one unit increase in the interest rate on the total dollar value of residential loans, holding all other independent variables constant. Since the coefficient is negative and equal to 1.3, we can interpret it as for an additional one percentage point increase in the interest rate, we would expect the total dollar value of residential loans to decrease by $1.3 million on average.

How Should the Loan Officer Interpret the Coefficient on X2

How Should the Loan Officer Interpret the Coefficient on X₂