Answer
Predicted stock return:
- CEO who made 15 million dollars: $ŷ =17.317$%
- CEO who made 25 million dollars: $ŷ =17.317$%
Work Step by Step
Since there is no linear relation between compensation and stock return (Problem 31 item (d) in section 4.1), we can not use the least-squares regression line to predict the stock return.
In this case, we use the mean value of the stock return to predict the stock return for a company:
$Mean_{stock~return}=\frac{5,91+30,39+31,72+79,76+(-8,40)+2,69+4,53+10,80+4,01+11,76}{10}=17.317$
