Question: Does higher paid CEO control the bigger Companies? Let us study x = annual CEO salary ( $, millions ) and y = annual company revenue ( $, millions). The following data are based on information from Forbes magazine and represents a sample of top US executives pay.

X ( $, millions ) 0.9 1.0 1.2 1.6 2.2

Y ( $, Millions) 14 11 19 20 23

a) Draw a scatter diagram. Using the scatter diagram ( no calculations) would you estimate the linear correlation coefficient to be positive, close to zero or negative?

b) Compute the sample correlation coefficient r. compute the coefficient of determination. Give a brief explanation of the meaning of the correlation coefficient and the coefficient of determination in the context of this problem.

c) Graph the least squares line on scatter plot of the problem.

d) IF a CEO has an annual salary of 1.5 million what is his or her annual company revenue as predicted by the least square lines