Listed Below Is Data on Profit and Market Capitalization for a Sample

question 36

Essay

Listed below is data on profit and market capitalization for a sample of 15 different firms in U.S. $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Profits (\$ } \\\text { millions) } \boldsymbol { y }\end{array} & \begin{array} { c } \text { Market Capitalization } \\\text { (\$ millions) } \boldsymbol { x }\end{array} \\\hline 296.2 & 1,936.9 \\\hline - 25 & 1,171.8 \\\hline 4,085 & 55,135.8 \\\hline 6,558 & 97,417.2 \\\hline 12,525 & 95,198.9 \\\hline 3,394 & 53,579.7 \\\hline 442.8 & 12,466.3 \\\hline 633.1 & 8,894.3 \\\hline 3,528 & 65,872.4 \\\hline 2,698 & 25,661.3 \\\hline 1,200.65 & 19,854.7 \\\hline 11.987 & 195,643.8 \\\hline 641.8 & 10,447.8 \\\hline 5,043 & 66,695.5 \\\hline 5,206 & 53,558.4 \\\hline\end{array}$$
a. Develop a scatter chart for the above data. What does this chart indicate about the relationship between market capitalization and profit?
b. Use the data to develop an estimated regression equation that could be used to estimate a firm's profit based on its market capitalization. What is the estimated regression model?
c. What is the predicted profit for the market capitalization of 70,721.3 (million)?

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