A company that provides cybersecurity services to small and medium-sized businesses, SafeOcean, offers several types of services.
Question:
A company that provides cybersecurity services to small and medium-sized businesses, SafeOcean, offers several types of services. Most client businesses start by paying for basic protection services, but many seem to shift to more complex products as they gain confidence in SafeOcean. The price of the monthly subscription depends on the services provided, size of the client company and negotiations between the two parties. SafeOcean is trying to determine whether clients really do subscribe to more complex and expensive products with time. The table below lists, for a sample of current SafeOcean clients, the price of monthly subscription and for how many months they have been SafeOcean's customers.
Considering the variable Price only, answer the following questions:
a) Use the sample prices to estimate the mean and the standard deviation of the variable Price. (5%)
b) SafeOcean classifies all observations that are two standard deviations above or below the mean as outliers. Considering the variable Price only, how many outliers are there in this sample dataset? Justify. (10%)
c) Knowing that the variable Price follows a normal distribution, determine the price value that is surpassed 90% of the times (the price that is lower than 90% of the distribution). (10%)
Considering the sample values of both variables, Price and Duration (of the connection between client and SafeOcean), answer the following questions:
d) Compute the covariance and correlation between the variables Price and Duration. (5%)
e) Represent the relationship between the variables Price and Duration using a scatter plot. (10%)
f) How would you classify or describe the relationship between the two variables? Justify. (5%)
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson