Question: How predictable are advertising budgets from year to year? Consider the 2008 and 2009 advertising spending of selected firms as reported in Table.
a. Summarize the strength of the year-to-year relationship in advertising budget by computing and interpreting the correlation coefficient and the coefficient of variation.
b. Draw a scatterplot with a least-squares line to predict spending in 2009 from spending in 2008.
c. Estimate the regression equation to predict spending in 2009 from spending in 2008.
d. Find the predicted value and residual value for Disney and interpret the residual value.
e. With this time period involving an economic recession, it is of interest to see whether advertising budgets were expanding (regression coefficient larger than 1) or shrinking (regression coefficient less than 1) from year to year. State your conclusion based on a hypothesis test of the regression coefficient against this reference value.
