The accompanying data represent the annual rates of return of two companies' stock for the past 12 years. Complete parts (a) through (i). (a) Draw a scatter diagram of the data treating the rate of return of Company 1 as the explanatory variable. Choose the correct graph below.

(b) Determine the correlation coefficient between rate of return of Company 1 and Company 2.

(c) Based on the scatter diagram and correlation coefficient, is there a linear relation between rate of return of Company 1 and Company 2? O No

O Yes

(d) Find the least-squares regression line treating the rate of return of Company 1 as the explanatory variable. Choose the correct answer below.

(e) Predict the rate of return of Company 2 if the rate of return of Company 1 is 0.2 (20%). The rate of return of Company 2 will be Data Table

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O A. ARR of Company 2 0.50- 0.00- -0.50- -0.3 0.0 0.3 RR of Company 1 O B. 0.30 ARR of Company 1 0.00- -0.30- -0.5 0.0 RR of Company 2 0.5 O C. ARR of Company 2 0.50- 0.00- -0.50- -0.3 0.0 RR of Company 1 0.3 О y=-1.5188x+0.0332 у=1.5188x-0.0332 o y=0.0332x+1.5188 у=1.5188x+0.0332 0000 О О Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Rate of Return of Company 1 Rate of Return of Company 2 0.203 0.398 0.310 0.510 0.267 0.410 0.195 0.526 -0.101 -0.060 -0.130 -0.151 -0.234 -0.377 0.264 0.090 0.030 0.128 -0.035 0.308 0.207 -0.014 0.113 0.027 n O A. ARR of Company 2 0.50- 0.00- -0.50- -0.3 0.0 0.3 RR of Company 1 O B. 0.30 ARR of Company 1 0.00- -0.30- -0.5 0.0 RR of Company 2 0.5 O C. ARR of Company 2 0.50- 0.00- -0.50- -0.3 0.0 RR of Company 1 0.3 О y=-1.5188x+0.0332 у=1.5188x-0.0332 o y=0.0332x+1.5188 у=1.5188x+0.0332 0000 О О Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Rate of Return of Company 1 Rate of Return of Company 2 0.203 0.398 0.310 0.510 0.267 0.410 0.195 0.526 -0.101 -0.060 -0.130 -0.151 -0.234 -0.377 0.264 0.090 0.030 0.128 -0.035 0.308 0.207 -0.014 0.113 0.027 n

Answer rating: 100% (QA)

A Following is the scatter plot of the data Option C is correct b Following table shows the calculat... View the full answer