Question

the accompanying data represent the total compensation for 12 randomly selected chief executive officers (ceo) and the companys stock performance in 2017. complete parts (a) through
below.
click the icon to view the ceo data.
(c) determine the linear correlation coefficient between compensation and stock return.
r = 0.023
(round to three decimal places as needed.)
(d) does a linear relation exist between compensation and stock return? does the explanatory variable appear to play a role in determining the response variable?
the linear correlation coefficient is close to so linear relation exists between the companys stock performance and their ceos compensation
to play a role in determining

Explanation:

The linear correlation coefficient \(r\) measures the strength and direction of a linear relationship between two variables. A value of \(r = 0.023\) is very close to \(0\). When \(r\) is close to \(0\), it indicates that there is little to no linear relationship between the two variables. In this context, the two variables are CEO compensation (response variable) and stock return (explanatory variable).

Answer:

The linear correlation coefficient is close to \(0\) so no linear relation exists between the company's stock performance (explanatory variable) and their CEO's compensation (response variable). The explanatory variable (stock return) does not appear to play a role in determining the response variable (CEO compensation).