Question

Obs	Dividend	Price
1	16.1	64.66
2	3.36	22.01
3	13.28	54.41
4	0.77	35.86
5	8.46	36.12
6	10.54	64.95
7	6.33	40.85
8	7.96	41.65
9	8.95	43.44
10	11.54	74.9
11	8.03	51.99
12	7.97	59.51
13	10.43	58.3
14	12.6	57.4
15	9.53	57.06
16	7.62	36.16
17	11.11	53.73
18	10.22	51.1
19	9.61	49.08
20	20.15	66.43
21	7.99	43.57
22	13.76	64.74
23	17.56	80
24	17.65	77.91
25	0.46	31.39
26	14.3	71.18
27	24.42	69.56
28	3.24	20.5
29	16.5	64.01
30	9.19	60.6

3. You are interested in analyzing the influence of annual dividends on stock prices.   (Whenever unstated, assume 95% significance level)

You think stock prices will rise or fall based on the annual dividend the company distributes.

a. State the independent and dependent variables.

IV:

DV:

b. Create a scatterplot of dividend and price per share for the 30 companies given with appropriate labels. (Highlight the columns Dividend and Price and pick Scatter under Insert/Charts)

Answer 1

a) We want to see whether the stock prices will rise or fall based on the annual dividend the company distributes. Therefore,

Independent variable: Annual Dividend
Dependent variable: Stock Prices

b) To create a scatterplot, insert the data into excel, select the two columns 'Dividend' and 'Price' and select the scatterplot by going to Insert->Charts -> Scatter. Check the screenshot below:

The scatterplot is:

We can see from the above scatterplot that there is a positive relationship between annual dividend and stock price. Hence, if the annual dividend distributed by the company increases, stock price is expected to increase.