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A USA Today editorial addressed the growth of compensation for corporate CEOs. Quoting a study made by BusinessWeek , USA Today indicated that the pay packages for CEOs have increased almost sevenfold on average from 1994 to 2004. The file titled CEODough contains the salaries of CEOs in 1994 and in 2004, adjusted for inflation.
a. Determine the ratio of the average salary for 1994 and 2004. Does it appear that BusinessWeek was correct? Explain your answer.
b. Examine the sample standard deviations. What do these suggest is the relationship between the two population standard deviations? Support your assertion.
c. Based on your response to part b, conduct a test of hypothesis to determine if the difference in the average CEO salary between 1994 and 2004 is more than $9.8 million. Use a p-value approach with a significance level of 0.025. |
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