Question

A manager of a local coffee shop analyzes the relationship between advertising and sales by reviewing the store’s data for the previous six months.

Advertising (in $100s)	Sales (in $1,000s)
20	15
25	18
30	20
22	16
27	19
26	20

a.	Calculate the mean of advertising and the mean of sales. (Round your answers to 2 decimal places.)

	Mean
Advertising
Sales

b.	Calculate the standard deviation of advertising and the standard deviation of sales. (Round your answers to 2 decimal places.)

	Standard Deviation
Advertising
Sales

c-1.	Calculate the covariance between advertising and sales. (Round your answer to 2 decimal places.)

Covariance

c-2.	Interpret the covariance between advertising and sales.
	Positive correlation Negative correlation No correlation

d-1.	Calculate the correlation coefficient between advertising and sales. (Round your answer to 2 decimal places.)

Correlation coefficient

d-2.	Interpret the correlation coefficient between advertising and sales.
	No correlation Strong positive correlation Weak negative correlation Weak positive correlation Strong negative correlation

Answer 1

Answer:

By using Excel functions:

a)

Advertising data is from B2:B7 and sales data is from C2:C7

To get averge of advertising

=AVERAGE(B2:B7)

=25

To get averge of sales

=AVERAGE(C2:C7)

=18

	Mean
Advertising	25
Sales	18

b)

To get stddev for advertsing

=STDEV.S(B2:B7)

=3.577709

To get std. dev for sales

= STDEV.S(C2:C7)

= 2.097618 = 2.10

	Standarddeviation
Advertising	3.58
Sales	2.10

c 1)

use excel function covariance =

= COVARIANCE.S(B2:B7;C2:C7)

= 7

c 2)

Positive Correlation

d 1)

Correlation Coefficient = CORREL(B2:B7;C2:C7)

= 0.9327 = 0.93

d 2)

Strong positive correlation