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.

	No correlation
	Positive correlation
	Negative 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.

	Strong positive correlation
	Weak negative correlation
	Strong negative correlation
	Weak positive correlation
	No correlation

Answer 1

Sol:

use excel functions to get the answers:

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

Solutionb:

To get stddev for advertsing

=STDEV.S(B2:B7)

=3.577709

To get stddev for sales

=STDEV.S(C2:C7)

=2.097618

2.097618

	Standard deviation
Advertising	3.58
Sales	2.1

Solutionc-1

use excelfunction covariance .s

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

=7

COVARIANCE=7

Since covariance is large and positive there is positive relationship

Solutionc2:

Positive correlation

Solutiond-1=CORREL(B2:B7;C2:C7)

r=0.93

there exists a strong positive correlation