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Is CEO compensation related to a company's performance? To test whether CEO compensation and a company's stock performance are related, a financial analyst collected data on 15 randomly selected, publicly traded companies. For each company, the analyst looked at two variables: the percent change in stock price over the past five years (which she denoted x) and the percent change in CEO compensation over the past five years (which she denoted y). For these 15 companies, the least-squares regression equation relating the two variables was y =-0.161 +0.039x, and the standard error of the slope of this least-squares regression line was approximately 0.018. Using her information, test for a significant linear relationship between these two variables by doing a hypothesis test regarding the population slope B.. (Assume that the variable y follows a normal distribution for each value of x and that the other regression assumptions are satisfied.) Use the 0.10 level of significance, and perform a two-tailed test. Then complete the parts below. (If necessary, consult a list of formulas,) (a) State the null hypothesis H, and the alternative hypothesis H,.

Is CEO compensation related to a company's performance? To test whether CEO compensation and a company's stock performance are related, a financial analyst collected data on 15 randomly selected, publicly traded companies. For each company, the analyst looked at two variables: the percent change in stock price over the past five years (which she denoted x) and the percent change in CEO compensation over the past five years (which she denoted y). For these 15 companies, the least-squares regression equation relating the two variables was y =-0.161 +0.039x, and the standard error of the slope of this least-squares regression line was approximately 0.018. Using her information, test for a significant linear relationship between these two variables by doing a hypothesis test regarding the population slope B.. (Assume that the variable y follows a normal distribution for each value of x and that the other regression assumptions are satisfied.) Use the 0.10 level of significance, and perform a two-tailed test. Then complete the parts below. (If necessary, consult a list of formulas,) (a) State the null hypothesis H, and the alternative hypothesis H,.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.6: Summarizing Categorical Data
Problem 23PPS
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Is CEO compensation related to a company's performance? Español To test whether CEO compensation and a company's stock performance are related, a financial analyst collected data on 15 randomly selected, publicly traded companies. For each company, the analyst looked at two variables: the percent change in stock price over the past five years (which she denoted x) and the percent change in CEO compensation over the past five years (which she denoted y). For these 15 companies, the least-squares regression equation relating the two variables was y =-0.161+0.039x, and the standard error of the slope of this least-squares regression line was approximately 0.018. Using her information, test for a significant linear relationship between these two variables by doing a hypothesis test regarding the population slope B,. (Assume that the variable y follows a normal distribution for each value of x and that the other regression assumptions are satisfied.) Use the 0.10 level of significance, and perform a two-tailed test. Then complete the parts below. Aa (If necessary, consult a list of formulas.) (a) State the null hypothesis H, and the alternative hypothesis H,. H, :0 H (b) Determine the type of test statistic to use. O=0 (Choose one) ▼ O<O (c) Find the value of the test statistic. (Round to three or more decimal places.) (d) Find the two critical values at the 0.10 level of significance. (Round to three or more decimal places.) and fe) Based on the information
Transcribed Image Text:Is CEO compensation related to a company's performance? Español To test whether CEO compensation and a company's stock performance are related, a financial analyst collected data on 15 randomly selected, publicly traded companies. For each company, the analyst looked at two variables: the percent change in stock price over the past five years (which she denoted x) and the percent change in CEO compensation over the past five years (which she denoted y). For these 15 companies, the least-squares regression equation relating the two variables was y =-0.161+0.039x, and the standard error of the slope of this least-squares regression line was approximately 0.018. Using her information, test for a significant linear relationship between these two variables by doing a hypothesis test regarding the population slope B,. (Assume that the variable y follows a normal distribution for each value of x and that the other regression assumptions are satisfied.) Use the 0.10 level of significance, and perform a two-tailed test. Then complete the parts below. Aa (If necessary, consult a list of formulas.) (a) State the null hypothesis H, and the alternative hypothesis H,. H, :0 H (b) Determine the type of test statistic to use. O=0 (Choose one) ▼ O<O (c) Find the value of the test statistic. (Round to three or more decimal places.) (d) Find the two critical values at the 0.10 level of significance. (Round to three or more decimal places.) and fe) Based on the information
significa V and perform a two-tailed test. Then complete the parts below. (If necessary, consult a list of formulas.) Español (a) State the null hypothesis H, and the alternative hypothesis H,. H : H :0 (b) Determine the type of test statistic to use. D=0 OSO Aa (Choose one) ▼ O<O (c) Find the value of the test statistic. (Round to three or more decimal places.) (d) Find the two critical values at the 0.10 level of significance. (Round to three or more decimal places.) I and I (e) Based on the information, can we conclude (using the 0.10 level) that there is a significant linear relationship between percent change in stock price over the past five years and percent change in CEO compensation over the past five years? Yes No
Transcribed Image Text:significa V and perform a two-tailed test. Then complete the parts below. (If necessary, consult a list of formulas.) Español (a) State the null hypothesis H, and the alternative hypothesis H,. H : H :0 (b) Determine the type of test statistic to use. D=0 OSO Aa (Choose one) ▼ O<O (c) Find the value of the test statistic. (Round to three or more decimal places.) (d) Find the two critical values at the 0.10 level of significance. (Round to three or more decimal places.) I and I (e) Based on the information, can we conclude (using the 0.10 level) that there is a significant linear relationship between percent change in stock price over the past five years and percent change in CEO compensation over the past five years? Yes No
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