The accompanying table shows a portion of the 30 companies that comprise the Dow Jones Industrial Average

(DJIA); the full data set can be found on the text website and is labeled DOW Characteristics. The second column shows the year that the company joined the DJIA (Year). The third column shows each company's Morningstar rating (Rating).

(Five stars is the best rating that a company can receive, indicating that the company's stock price is undervalued and thus a very good buy. One star is the worst rating a company can be given, implying that the stock price is overvalued and a bad buy.) Finally, the fourth column shows each company's stock price as of June 30, 2010 (Stock Price).

a. What is the measurement scale of the Year data? What are the strengths of this type of data? What are the weaknesses?

b. What is the measurement scale of Morningstar's star-based rating system? Summarize Morningstar's star-based rating system for the companies in tabular form. Let 5 denote *****, 4 denote ****, and so on. What information can be extracted from this data?

c. What is the measurement scale of the Stock Price data?
What are its strengths? P-7

Transcribed Image Text:

Company Year Rating Stock Price 3M (MMM) 1976 $78.99 Alcoa (AA) 1959 10.03 Walt Disney (DIS) 1991 *** 31.50