QUESTION 3 The following table contains the return on equity (ROE) and share price of ABC Corporation: Share price ($) Return on Equity (%) 1101 10 12 20 3.1 Calculate the mean of the return on equity and the mean of share price; 3.2 Calculate the variance of the return on equity and the variance of share price; 3.3 Calculate the standard deviation of the return on equity and the standard deviation of share price; 3.4 Calculate the covariance between the retum on equity and share price. Is the relationship between the return on equity and share price negan ive? Why or why not? 3.5 Calculate the coefficient of correlation between the return on equity and share price. Is the relationship between returm on equity and share price weak? Why or why not? 3.6 In order to boost share price, would you recommend a strategy that aims at improving retun on equity? Why or why not?

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
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Author:Carter
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Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
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QUESTION 3
The following table contains the return on equity (ROE) and share price of ABC Corporation:
Return on Equity (%)
Share price ($)
10
12
20
3.1 Calculate the mean of the return on equity and the mean of share price;
3.2 Calculate the variance of the return on equity and the variance of share price;
3.3 Calculate the standard deviation of the return on equity and the standard
deviation of share price;
3.4 Caleculate the covariance between the retum on equity and share price. Is the
relationship between the return on equity and share price negative? Why or why not?
3.5 Calculate the coefficient of correlation between the return on equity and share
price. Is the relationship between return on equity and share price weak? Why or why
not?
3.6 In order to boost share price, would you recommend a strategy that aims at
improving return on equity? Why or why not?
2508
Transcribed Image Text:QUESTION 3 The following table contains the return on equity (ROE) and share price of ABC Corporation: Return on Equity (%) Share price ($) 10 12 20 3.1 Calculate the mean of the return on equity and the mean of share price; 3.2 Calculate the variance of the return on equity and the variance of share price; 3.3 Calculate the standard deviation of the return on equity and the standard deviation of share price; 3.4 Caleculate the covariance between the retum on equity and share price. Is the relationship between the return on equity and share price negative? Why or why not? 3.5 Calculate the coefficient of correlation between the return on equity and share price. Is the relationship between return on equity and share price weak? Why or why not? 3.6 In order to boost share price, would you recommend a strategy that aims at improving return on equity? Why or why not? 2508
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