The given data represent the total compensation for 10 randomly selected CEOs an

Question

The given data represent the total compensation for 10 randomly selected CEOs and their company's stock performance in 2009. Analysis of this data reveals a correlation coefficient of -0 2 135 What would be the predicted stock return for a company whose CEO made $15 million? What would be the predicted stock return for a company whose CEO made $25 million? EB Click the icon to view the compensation and stock performance data. Click the icon to view a table of critical values for the correlation coefficient. What would be the predicted stock return 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 return for a company whose CEO made $25 million? ?% (Type an integer or decimal rounded to one decimal place as needed )

Explanation / Answer

Rcode::

lm function to fit a linear model.

compensation <- c(26.02,12.63,19.86,13.48,12.65,12.33,26.12,15.26,17.18,14.65)
stockreturn <- c(5.66,29.94,31.45,80.25,-8.57,2.75,4.12,10.56,4.06,11.55)
rmod=lm(stockreturn~compensation)
newdata = data.frame(compensation=15)
predict(rmod, newdata, interval="predict")

output:

fit lwr upr
1 19.23219 -44.6649 83.12927

predicted =19.2%

Solutionb:

newdata1 = data.frame(compensation=25)
predict(rmod, newdata1, interval="predict")

fit lwr upr
1 9.047905 -61.26182 79.35763

predicted=9.0%

cor(compensation,stockreturn)

r=-0.2135

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