A financial analyst is examining the relationship between stock prices and earnings per share. She chooses fifteen publicly traded companies at random and records for each the company's current stock price and the company's earnings per share reported for the past12 months. Her data are given below, with x denoting the earnings per share from the previous year and y denoting the current stock price (both in dollars). A scatter plot of her data is shown in Figure 1. Also given is the product of the earnings per share and the current stock price for each of the fifteen stocks. (These products, written in the column labelled " xy Earnings per share, x(in dollars)Current stock price, y(in dollars)xy49.651.5375.964527.341.0929.800636.071.4753.022921.110.7014.77758.192.32135.000858.322.86166.795243.481.0846.958418.200.8515.4741.851.6870.30832.391.6854.415230.671.3441.097842.031.5464.726215.560.548.402440.101.1947.71930.600.7623.256Send data to calculatorSend data to ExcelCurrent stock price(in dollars)y0.511.522.53x1020304050600 Earnings per share(in dollars) Figure 1 What is the sample correlation coefficient for these data? Carry your intermediate computations to at least four decimal places and round your answer to at least three decimal places. (If necessary, consult a list of formulas.)

Given data, Earnings per share (in dollars) X Current stock price (in dollars) Y 49.65 1.53…

Answered: A financial analyst is examining the…

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter7: Distance And Approximation

Section7.3: Least Squares Approximation

Problem 31EQ

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A financial analyst is examining the relationship between stock prices and earnings per share. She chooses fifteen publicly traded companies at random and records for each the company's current stock price and the company's earnings per share reported for the past12 months. Her data are given below, with x denoting the earnings per share from the previous year and y denoting the current stock price (both in dollars). A scatter plot of her data is shown in Figure 1. Also given is the product of the earnings per share and the current stock price for each of the fifteen stocks. (These products, written in the column labelled " xy

Earnings per share, x (in dollars)	Current stock price, y (in dollars)	xy
49.65	1.53	75.9645
27.34	1.09	29.8006
36.07	1.47	53.0229
21.11	0.70	14.777
58.19	2.32	135.0008
58.32	2.86	166.7952
43.48	1.08	46.9584
18.20	0.85	15.47
41.85	1.68	70.308
32.39	1.68	54.4152
30.67	1.34	41.0978
42.03	1.54	64.7262
15.56	0.54	8.4024
40.10	1.19	47.719
30.60	0.76	23.256

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Current stock price
(in dollars)

0.5

1.5

2.5

Earnings per share
(in dollars)

Figure 1

What is the sample correlation coefficient for these data? Carry your intermediate computations to at least four decimal places and round your answer to at least three decimal places. (If necessary, consult a list of formulas.)

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