Statistics for Business & Economics, Revised (MindTap Course List)
Statistics for Business & Economics, Revised (MindTap Course List)
12th Edition
ISBN: 9781285846323
Author: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran
Publisher: South-Western College Pub
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Chapter 14.2, Problem 10E

On March 31, 2009, Ford Motor Company’s shares were trading at a 26-year low of $2.63. Ford’s board of directors gave the CEO a grant of options and restricted shares with an estimated value of $16 million. On April 26, 2011, the price of a share of Ford had increased to $15.58, and the CEO’s grant was worth $202.8 million, a gain in value of $186.8 million. The following table shows the share price in 2009 and 2011 for 10 companies, the stock-option and share grants to the CEOs in late 2008 and 2009, and the value of the options and grants in 2011. Also shown are the percentage increases in the stock price and the percentage gains in the options values (The Wall Street Journal, April 27, 2011).

Company Stock Price 2009 ($) Stock Price 2011 ($) % Increase in Stock Price Options and Grants Value 2009 ($ millions) Options and Grants Value 2011 ($ millions) % Gain in Options Value
Ford Motor 2.63 15.58 492 16.0 202.8 1168
Abercrombie & Fitch 23.80 70.47 196 46.2 196.1 324
Nabors Industries 9.99 32.06 221 37.2 132.2 255
Starbucks 9.99 32.06 221 12.4 75.9 512
Salesforce.com 32.73 137.61 320 7.8 67.0 759
Starwood Hotels 12.70 60.28 375 5.8 57.1 884
Caterpillar 27.96 111.94 300 4.0 47.5 1088
Oracle 18.07 34.97 94 61.9 97.5 58
Capital One 12.24 54.61 346 6.0 40.6 577
Dow Chemical 8.43 39.97 374 5.0 38.8 676
  1. a. Develop a scatter diagram for these data with the percentage increase in the stock price as the independent variable.
  2. b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
  3. c. Develop the least squares estimated regression equation.
  4. d. Provide an interpretation for the slope of the estimated regression equation.
  5. e. Do the rewards for the CEO appear to be based on performance increases as measured by the stock price?
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Chapter 14 Solutions

Statistics for Business & Economics, Revised (MindTap Course List)

Ch. 14.2 - Sporty cars are designed to provide better...Ch. 14.2 - Concur Technologies, Inc., is a large...Ch. 14.2 - To the Internal Revenue Service, the...Ch. 14.2 - PCWorld rated four component characteristics for...Ch. 14.3 - The data from exercise 1 follow. xi 1 2 3 4 5 yi 3...Ch. 14.3 - The data from exercise 2 follow. xi 3 12 6 20 14...Ch. 14.3 - The data from exercise 3 follow. xi 2 6 9 13 20 yi...Ch. 14.3 - The following data show the brand, price (), and...Ch. 14.3 - In exercise 7 a sales manager collected the...Ch. 14.3 - Bicycling, the worlds leading cycling magazine,...Ch. 14.3 - An important application of regression analysis in...Ch. 14.3 - Refer to exercise 5 where the following data were...Ch. 14.5 - The data from exercise 1 follow. xi 1 2 3 4 5 yi 3...Ch. 14.5 - The data from exercise 2 follow. xi 3 12 6 20 14...Ch. 14.5 - The data from exercise 3 follow. xi 2 6 9 13 20 yi...Ch. 14.5 - In exercise 18 the data on price () and the...Ch. 14.5 - The number of megapixels in a digital camera is...Ch. 14.5 - In exercise 8 ratings data on x = the quality of...Ch. 14.5 - Refer to exercise 21, where data on production...Ch. 14.5 - Prob. 30ECh. 14.5 - In exercise 20, data on x = weight (pounds) and y...Ch. 14.6 - The data from exercise 1 follow. xi 1 2 3 4 5 yi 3...Ch. 14.6 - The data from exercise 2 follow. xi 3 12 6 20 14...Ch. 14.6 - The data from exercise 3 follow. xi 2 6 9 13 20 yi...Ch. 14.6 - The following data are the monthly salaries y and...Ch. 14.6 - In exercise 7, the data on y = annual sales (...Ch. 14.6 - In exercise 13, data were given on the adjusted...Ch. 14.6 - Refer to exercise 21, where data on the production...Ch. 14.6 - Almost all U.S. light-rail systems use electric...Ch. 14.7 - The commercial division of a real estate firm is...Ch. 14.7 - Following is a portion of the computer output for...Ch. 14.7 - A regression model relating x, number of...Ch. 14.7 - Out-of-state tuition and fees at the top graduate...Ch. 14.7 - Automobile racing, high-performance driving...Ch. 14.8 - Given are data for two variables, x and y. xi 6 11...Ch. 14.8 - The following data were used in a regression...Ch. 14.8 - Data on advertising expenditures and revenue (in...Ch. 14.8 - Refer to exercise 7, where an estimated regression...Ch. 14.8 - Recent family home sales in San Antonio provided...Ch. 14.9 - Consider the following data for two variables, x...Ch. 14.9 - Consider the following data for two variables, x...Ch. 14.9 - Charity Navigator is Americas leading independent...Ch. 14.9 - Many countries, especially those in Europe, have...Ch. 14.9 - Prob. 54ECh. 14 - Does a high value of r2 imply that two variables...Ch. 14 - In your own words, explain the difference between...Ch. 14 - What is the purpose of testing whether 1 = 0? If...Ch. 14 - The Dow Jones Industrial Average (DJIA) and the...Ch. 14 - The following data show Morningstars Fair Value...Ch. 14 - One of the biggest changes in higher education in...Ch. 14 - Jensen Tire Auto is in the process of deciding...Ch. 14 - In a manufacturing process the assembly line speed...Ch. 14 - A sociologist was hired by a large city hospital...Ch. 14 - The regional transit authority for a major...Ch. 14 - A marketing professor at Givens College is...Ch. 14 - The Transactional Records Access Clearinghouse at...Ch. 14 - The Toyota Camry is one of the best-selling cars...Ch. 14 - You have been assigned to analyze the risk...Ch. 14 - As part of a study on transportation safety, the...Ch. 14 - Consumer Reports tested 166 different...Ch. 14 - Finding the Best Car Value When trying to decide...
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