Simple linear regression equationa stock market analyst at

Reference no: EM13357562

Simple linear regression equation.

A stock market analyst at the Newyork Stock Exchange was interested in the relationship between company performance and performance related pay to Chief Executive Officers (CEOs) for selected companies form the Dow Jones index, prior to the 2008 banking crisis. She measured the annual performance over the accounting year 2007-08 for 7 randomly selected companies of interest, using a recognized balanced score card index. She then collated the corresponding performance related payment for the corresponding CEO of each of the companies of interest as shown in table. Her findings are exhibited in the scatter plot in figure.

a) Provide a brief description of the main features of these data from the scatter plot.

b) The (Pearson) Correlation Coefficient betwee these two random variables was calculated. Three competing values for this are given in table. Identify the correct value based on the scatter plot and regression output in table. You must clearly expalin tour selection and why you have rejected the two ther values.

c) It is decided to fit these data using a regression model:

i) Explain why you would use performance as the predictor variable and performane related pay as the dependent variable in such a model.

ii) Provide a formal linear regression model to represent these data. You must define each term in the model.

d) The results of the regression are exhibited in table. Assuming that the model assumption hold, conduct formal tests on the regression coefficients. You must clearly state H₀ and H₁ and your conclusions for both tests.

e) Provide an expression for the final model based entirely on your answers to part (d) and clearly explain what this represents.

Performance	Performane related pay
333.7	4,246.40
415.9	1,231.61
253.2	2,696.42
231.8	2,626.81
385.0	641.61
330.4	4,660.56
313.6	5,139.75

Type	Sample Correlation Coefficient value
A	-0.929
B	-0.005
C	-0.315

Predictor	Coefficient	Standard error	t-Statictic	P - value
Intercept	5684	3702	1.54	0.185
Performance	-8.35	11.25	-0.74	0.491

1730_Simple linear regression equation.png

Reference no: EM13357562

Questions Cloud

Hypothesis test for one population meana researcher asks : hypothesis test for one population mean.a researcher asks whether attending a private high school leads to higher or

Select a small business in your community briefly analyze : select a small business in your community. briefly analyze the businesss customers or potential customers and develop a

Paired samples t-test for the given dataa local voluntary : paired samples t-test for the given data.a local voluntary organization affiliated to the citizens advice bureau offers

Comparison of paired and unpaired samples : comparison of paired and unpaired samples test.nbspnbspnbspnbspnbspnbspnbspnbspnbspnbsp a local voluntary organization

Simple linear regression equationa stock market analyst at : simple linear regression equation.a stock market analyst at the newyork stock exchange was interested in the

Random number generation using discrete probability : random number generation using discrete probability distribution.the time between arrivals of cars at the petroco

Fitting of multiple linear regression equationthe revenues : fitting of multiple linear regression equation.the revenues gained from sales of books from an e-book supplier the book

Random number generation based on discretenbsp : random number generation based on discretenbsp distribution.first american bank is trying to determine whether it

Hypothesis test for two factors : hypothesis test for two factors anova.nbspnbspnbspnbspnbspnbsp a mail order catalogue company operates with three

User Account

All Pages