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 r = −0.2062. 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?

Compensation ($ millions)   Stock Return (%)
26.34   5.43
12.93   29.92
19.58   31.86
13.33   79.55
12.55   -8.22
11.54   2.65
26.54   4.74
15.16   10.97
17.32   3.82
14.41   11.56

Critical Values for Correlation Coefficient  
n  
3   0.997
4   0.950
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  

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.)

What would be the predicted stock return for a company whose CEO made​ $25 million?

__?__​%

​(Type an integer or decimal rounded to one decimal place as​ needed.)

Answer 1

as correlation coefficient is less than critical value we can not conclude that linear regression is significant.therefore mean value will be best predicted stock return

1)

predicted stock return for a company whose CEO made​ $15 million = 17.2%

2)

e predicted stock return for a company whose CEO made​ $25 million =17.2%