Discussion:
Q: Data on X (net profits after tax in U.S. manufacturing industries [$, in millions]) and Y (cash dividend paid quarterly in manufacturing industries [$, in millions]) for years 1974 to 1986.
a. What relationship, if any, do you expect between cash dividend and after-tax profits?
b. Plot the scattergram between Y and X.
c. Does the scattergram support your expectations in part (a)?
d. If so, do an OLS regression of Y on X and obtain the usual statistics.
e. Establish a 99% confidence interval for the true slope and test the hypothesis that the true slope coefficient is zero; that is, there is no relationship between dividend and the after-tax profit.
TABLE CASH DIVIDEND (Y) AND AFTER-TAX PROFITS (X) IN U.S. MANUFACTURING INDUSTRIES, 1974-1986
|
Year
|
Y
|
X
|
|
$ in millions
|
|
1974
|
19,467
|
58,747
|
|
1975
|
19,968
|
49,135
|
|
1976
|
22,763
|
64,519
|
|
1977
|
26,585
|
70,366
|
|
1978
|
28,932
|
81,148
|
|
1979
|
32,491
|
98,698
|
|
1980
|
36,495
|
92,579
|
|
1981
|
40,317
|
101,302
|
|
1982
|
41,259
|
71,028
|
|
1983
|
41,624
|
85,834
|
|
1984
|
45,102
|
107,648
|
|
1985
|
45,517
|
87,648
|
|
1986
|
46,044
|
83,121
|