Salesperson
the General Manager of a Chain of Furniture Stores

question 36

Essay

Salesperson
The general manager of a chain of furniture stores believes that experience is the most important factor in determining the level of success of a salesperson.To examine this belief she records last month's sales (in $1,000s)and the years of experience of 10 randomly selected salespeople.These data are listed below.
$$\begin{array} { | c | c | c | } \hline \text { Ealesperson } & \text { Years of Experience } & \text { Eales } \\\hline 1 & 0 & 7 \\\hline 2 & 2 & 9 \\\hline 3 & 10 & 20 \\\hline 4 & 3 & 15 \\\hline 5 & 8 & 18 \\\hline 0 & 5 & 14 \\\hline 7 & 12& 20 \\\hline 8 &7 & 17 \\\hline 9 &20 & 30 \\\hline 10 & 15& 25 \\\hline\end{array}$$
-Conduct a test of the population slope to determine at the 5% significance level whether a linear relationship exists between years of experience and sales.

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Definitions:

Volatility

The degree of variation of a trading price series over time, often used to gauge the risk in investments.

Put-call Parity

A principle in options pricing that shows the relationship between European put and call options with the same strike price and expiration date.

Risk-free Rate

The risk-free rate is the theoretical return of an investment with zero risk, representing the interest an investor would expect from an absolutely risk-free investment over a specified period.

Exercise Price

Also known as the strike price, it is the price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.