Question

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.)

Answer 1

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