SOA Exam SRM Sample Question 27
Study guide: Exam SRM
Trevor is modeling monthly incurred dental claims. Trevor has 48 monthly claims observations and three potential predictors:
-
Number of weekdays in the month
-
Number of weekend days in the month
-
Average number of insured members during the month
Trevor obtained the following results from a linear regression:
| Coefficient | Standard Error | t Stat | p-value | |
|---|---|---|---|---|
| Intercept | –45,765,767.76 | 20,441,816.55 | –2.24 | 0.0303 |
| Number of weekdays | 513,280.76 | 233,143.23 | 2.20 | 0.0330 |
| Number of weekend days | 280,148.46 | 483,001.55 | 0.58 | 0.5649 |
| Average number of members | 38.64 | 6.42 | 6.01 | 0.0000 |
Determine which of the following predictors should be dropped, using a 5% significance level.
- A) None
- B) Number of weekdays only
- C) Number of weekend days only
- D) Average number of members
- E) All three predictors should be dropped
Answer this question and see the worked solution