Are top executives of larger companies paid significantly more than those of smaller companies? Consider data on CEO pay (dollars) and market capitalization (the total market value of stock, in $ millions) for a sample of companies, as shown in Table 11.3.11.
a. How strong is the association between CEO pay and market capitalization? Please give both a number and its interpretation in words.
b. Find the regression equation to explain CEO pay using market capitalization.
c. Find and interpret the residual value for Red Lion Hotels, predicting CEO pay from market capitalization.
d. Find and interpret the 95% confidence interval for the slope coefficient.
e. Is there a significant relationship between CEO pay and market capitalization? How do you know?

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TABLE 11.3.11 CEO Pay and Market Capitalization Company Name Red Lion Hotels F5 Networks InfoSpace SeaBright insurance Holdings Fisher Communications Esterline Technologies Washington Banking Columbia Sportswear American Ecology Cascade Financial Menx Coinstar Intermec Jones Soda Rentrak Coeur d'Alene Mines Key Technology Pacific Continental Cardiac Science Washington Federal Market Cap CEO Anupam Narayan John McAdam James F. Voelker John G. Pasqualetto Colleen B. Brown Robert W. Cremin John L. Wagner Timothy P. Boyle Stephen A. Romano Garol K. Nelson Michael D. Burger David W. Cole Patrick J. Byrne Stephen C. Jones Paul A. Rosenbaum Dennis E. Wheeler David M. Camp, Ph.D. Hal M. Brown John R. Hinson Roy M. Whitehead CEO Pay 688,085 4,336,857 6,224,477 1,949,555 1,102,630 5,063,367 362,883 827,799 501,210 302,380 1,406,758 1,994,972 2,888,301 384,207 501,828 2,167,021 997,818 528,341 838,023 720,415 1,821 261 251 180 1,125 83 1,197 370 551 820 124 485 180 172 1,316