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?
_____ 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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