Question
The accompanying data represent the total compensation for 12 randomly selected chief executive officers(CEO) and thecompany's stock performance in a recent year. Complete parts(a) through(d)
The accompanying data represent the total compensation for 12 randomly selected chief executive officers(CEO) and thecompany's stock performance in a recent year. Complete parts(a) through(d) below.
CompanyCompensation ($mil)Stock Return (%)
Company A14.5875.45
Company B4.0763.99
Company C7.08142.06
Company D1.0732.69
Company E1.9810.68
Company F3.7930.69
Company G12.07 0.72
Company H7.5669.43
Company I8.4758.75
Company J4.0555.95
Company K20.8524.33
Company L6.6632.25
(a) One would think that a higher stock return would lead to a higher compensation. Based onthis, what would likely be the explanatoryvariable? Compensation or Stock return
(b) Draw a scatter diagram of the data. Use the result from part(a) to determine the explanatory variable.
(c) Determine the linear correlation coefficient between compensation and stock return.
r =
(Round to three decimal places asneeded.)
(d) Does a linear relation exist between compensation and stockreturn? Does stock performance appear to play a role in determining the compensation of aCEO?
The linear correlation coefficient is close to 1, -1, OR 0, so NO, A POSTIVE OR A NEGATIVE linear relation exists between compensation and stock return. It appears that stock performance plays NO, A POSTIVE OR A NEGATIVE role in determining the compensation of a CEO.
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Big Ideas Math Algebra 1 (2018)
Authors: Ron Larson, Laurie Boswell
Common Core Curriculum
1642087173, 978-1642087178
