Question

The accompanying data represent the total compensation for 12 randomly selected chief executives officers(CEO) and the...

The accompanying data represent the total compensation for 12 randomly selected chief executives officers(CEO) and the company's stock performance in a recent year

Company Compensation($mil)Stock Return(%)

Company A 14.56 75.49

Company B 4.09 63.96

Company C 7.07 142.03

Company D 1.04 32.66

Company E 1.91 10.63

Company F 3.76 30.69

Company G 12.03 0.78

Company H 7.63 69.43

Company I 8.47 58.66

Company J 4.06 55.91

Company k 20.92 24.31

Company L 6.67 32.25

(a). One would think that a higher stock return would lead to a higher compensation. Based on this, what would likely be the explanatory variable?

_______ Compensation

_____ Stock return

(b) Draw a scatter diagram of the data. Use the result from part (a) to determine the explanatory variable.

(c) Determine the linear correlation coefficient between compensation and stock return.

r=________.(Round to three decimal places)

(d) Does a linear relation exist between compensation and stock return? Does stock performance appear to play a role in determining the compensation of a CEO?

The linear correlation coefficient is close to ( 0, -1, or 1) so ( a negative, a positive or No)linear relation exists between compensation and stock return. It appears that stock performance plays( No, a positive or a negative)role in determining the compensation of a CEO.

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