Question

In: Statistics and Probability

To determine whether the cash bonuses paid by Johnson Financial Group are related to annual pay,...

To determine whether the cash bonuses paid by Johnson Financial Group are related to annual pay, data were gathered for 10 account executives who received such bonuses in 2007.

The data, scatterplot and summary statistics are shown below.

ANNUAL PAY CASH BONUS
$70,769 $11,935
$58,707 $15,946
$104,779 $15,956
$44,064 $17,147
$82,834 $12,519
$116,440 $23,799
$76,888 $13,312
$68,654 $21,360
$137,092 $48,880
$94,536 $34,983

1) Comment on whether each of the following conditions for correlation / linear regression is met. (2 points)
Quantitative Variables Condition
Linearity Condition
Outlier Condition

2) Estimate the linear regression model that relates the response variable (Cash Bonus) to the predictor variable (Annual Pay). (2 points)
Find the slope of the regression line.  

Find the intercept of the regression line.  

Write the equation of the linear model.

3) Find the value of R2. Interpret its meaning in this context. (2 points)

4) Using the regression equation, estimate the cash bonus for an executive at Johnson Financial earning $44,064 a year.
What is the residual for this estimate? What does it mean? (2 points)

Solutions

Expert Solution

orchestra answered 1 year ago
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