Question: Below are the appraised values and the sales prices for five different real estate properties. Using Excel, calculate the r value (Pearson correlation coefficient) for these data.

What does the calculated r mean for this problem?

Explain the linear relationship between the variables.

Is there a causal relationship between the two variables? Why do you say that?

Can r be tested for significance? If so, why would a researcher want to do so?

Appraised Value* Sale Price

2 2

3 5

4 7

5 10

6 11

*In $100,000’s