MC 2017 data represent the total compensation for 10 randomly selected CEOs and

Question

MC 2017 data represent the total compensation for 10 randomly selected CEOs and their company's stock performance alysis of this data reveals a correlation coefficient of -0.1888. What would be the predicted stock return pany whose CEO made $15 million? What would be the predicted stock retun for a company whose CEO mad . The given in 2009. An for a company whose CEO made $15 mill $25 million? 1 Click the icon to view the compensation and stock performance data. 2Click the icon to view a table of critical values for the correlation coefficient. What would be the predicted stock retum 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 returm for a company whose CEO made $25 million? % (Type an integer or decimal rounded to one decimal place as needed.) : CEO Compensation and Stock Performance Compensation (millions of dollars) Stock Return (%) 26.39 12.71 9.51 13.43 11.93 11.53 26.34 15.17 17.46 14.17 6.34 29.89 31.41 79.83 -8.29 3.06 4.36 10.96 3.89 12.07 : Critical Values for Correlation Coefficient

Explanation / Answer

here we fit the linear regression y=a+bx=31.67-0.8491*x

b=r*SD(y)/SD(x)=(-0.1888)*23.79/5.29=-0.8491

a=mean(y)-b*mean(x)=17.35-(-0.8491)*16.86=31.67

for x=15, y=31.67-0.8491*15=18.93

for x=25, y=31.67-0.8491*25=10.44

following calcualtion has been done using ms-excel

compensation(x) stock return(y) 26.39 6.34 12.71 29.89 19.51 31.41 13.43 79.83 11.93 -8.29 11.53 3.06 26.34 4.36 15.17 10.96 17.46 3.89 14.17 12.07 mean= 16.86 17.35 SD= 5.29 23.79 n= 10 10 corr(x,y)=r= -0.1888 b= -0.8491 a= 31.6658

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