The given data represent the total compensation for 10 randomly selected CEOs and their company's stock performance in 2009. Analysis of this data reveals a correlation coefficient of =-0.2257
What would be the predicted stock return for a company whose CEO made $15 million? What would be the predicted stock return for a company whose CEO made $25 million?
Data
Compensation ($ millions) | Stock Return (%) |
25.88 | 6.34 |
12.54 | 29.96 |
19.66 | 31.35 |
13.09 | 79.73 |
12.47 | -8.23 |
11.62 | 3.02 |
26.71 | 4.23 |
15.01 | 10.62 |
17.86 | 4.34 |
14.74 | 12.08 |
Critical values
Critical Values for Correlation Coefficient | |
n | |
3 | 0.997 |
4 | 0.95 |
5 | 0.878 |
6 | 0.811 |
7 | 0.754 |
8 | 0.707 |
9 | 0.666 |
10 | 0.632 |
11 | 0.602 |
12 | 0.576 |
13 | 0.553 |
14 | 0.532 |
15 | 0.514 |
16 | 0.497 |
17 | 0.482 |
18 | 0.468 |
19 | 0.456 |
20 | 0.444 |
21 | 0.433 |
22 | 0.423 |
23 | 0.413 |
24 | 0.404 |
25 | 0.396 |
26 | 0.388 |
27 | 0.381 |
28 | 0.374 |
29 | 0.367 |
30 | 0.361 |
n |
This the answer I need help with-
What would be the predicted stock return for a company whose CEO made $15 million?
(Type an integer or decimal rounded to one decimal place as needed.)
correlation r='Sxy/(√Sxx*Syy) = | -0.226 |
since correlation coefficient absolute value is not greater than critical value of 0.632 ; we can not use regression for prediction
predicted stock return for a company whose CEO made $15 million =average of y values =17.3
predicted stock return for a company whose CEO made $25 million =average of y values =17.3
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