# Interaction Variable

Question

One   manager suggests that the company may be able to check on the progress of the   wellness campaign by observing changes in the body mass index instead of   redoing the more costly cholesterol reading. The body-mass index is defined   as the ratio of the weight to the square of the height, multiplied by 703 if   the height is measured in inches and the weight is measure in pounds. BMI =   703*Weight/(Height^2). There is also some discussion that changes in the BMI   may be more effective in reducing male chlesterol readings than female   cholesterol readings.

a) Create the BMI variable and a dummy variable for   sex, called Male, which is zero for females and 1 for males.

b) Estimate a   multiple regression model that includes the sex dummy, BMI and an interaction   variable between BMI and sex, as independent variables.

c) Calculate   predicted values for cholesterol readings for both men and women at BMI   values of 25 and 30.

d) Summarize and interpret the results of this model. Is   BMI relevant for the program? What do you tell the management team about the   relative importance of the BMI for men and women?

Question

1 . In  CY 2011, State  Farm  Insurance Corporation reported that  the  average  loss payment  per  insurance claim  by  automobile  owners  in  Anchorage, Alaska  was

\$3,050 with  a standard deviation  of \$950.  Assume  that  the  distribution of loss­

payment per claim is “mound-shaped”.  Approximately what fraction or percentage of the loss-payments will be \$2,800 or more?  (6 points)

2 . The average UAA female athlete is 72 inches tall with a standard deviation of six inches.

a.  What is the percentage of UAA female athletes are 64 inches or taller?

b.  What is the percentage of UAA female athletes are 57 inches or shorter? (8 points)

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