Table 3-6 gives data on X (net profits after tax in U.S. manufacturing industries [$, in millions]) and Y (cash dividend paid quarterly in manufacturing industries [$, in millions]) for years 1974 to 1986.
CASH DIVIDEND (V) AND AFTER-TAX PROFITS (X)
IN U.S. MANUFACTURING INDUSTRIES, 1974-1986

a. What relationship, if any, do you expect between cash dividend and after-tax profits?
b. Plot the scatter gram between Y and X.
c. Does the scatter gram support your expectations in part (a)?
d. If so, do an OLS regression of Y on X and obtain the usual statistics.
e. Establish a 99% confidence interval for the true slope and test the hypothesis that the true slope coefficient is zero; that is, there is no relationship between dividend and the

Transcribed Image Text:

Year Year (S, in millions) (S, in millions) 1974 19,467 58,747 1981 40,317 101,302 1975 19,968 49,135 1982 41,259 71,028 1976 22,763 64,519 1983 41,624 85,834 1977 26,585 70,366 198445,102 107,648 1978 28,932 81,148 1985 45,517 87,648 1979 32,491 98,698 1986 46,044 83,121 1980 36,495 92,579