The accompanying data represent the total compensation for12randomly selected chief executive officers(CEO)and thecompany'sstock performance in a recent year. Complete parts(a)through(d)below.

Company

Compensation($mil)

Stock Return(%)

Company A

14.51

75.46

Company B

4.05

63.95

Company C

7.14

142.07

Company D

1.07

32.66

Company E

1.97

10.68

Company F

3.78

30.68

Company G

12.04

0.76

Company H

7.57

69.37

Company I

8.42

58.74

Company J

4.08

55.98

Company K

20.88

24.28

Company L

6.61

32.22

a)One would think that a higher stock return would lead to a higher compensation. Based onthis,what would likely be the explanatoryvariable?

*Compensation

*Stock return

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.

requals=

(Roundto three decimal places asneeded.)

The linear correlation coefficient is close to______so________linear relation exists between compensation and stock return. It appears that stock performance plays_____role in determining the compensation of a CEO.