Question

Compensation ​(millions of​ dollars)	Stock Return​ (%)
26.81	5.58
12.82	30.26
19.64	31.47
13.14	79.88
12.37	-8.24
12.07	2.82
25.87	4.39
14.86	10.88
17.16	4.26
14.63	11.98

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

requals=negative 0.2209−0.2209.

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

Answer 1

From the provided information, the table can be made as:

The slope and intercept can be obtained as:

The equation of regression line is as follow:

For a company whose CEO made​ $25 million the stock return can be calculated as:

Thus, the stock return is 9.15%.