Mr. William Profit is studying companies going public for the first time. He is particularly interested in the relationship between the size of the offering and the price per share. A sample of 15 companies that recently went public revealed the following information.
Company Size ($ millions), X Price per Share, Y Company Size ($ millions), X Price per Share Y
1 9.0 10.8 9 160.7 11.3
2 94.4 11.3 10 96.5 10.6
3 27.3 11.2 11 83.0 10.5
4 179.2 11.1 12 23.5 10.3
5 71.9 11.1 13 58.7 10.7
6 97.9 11.2 14 93.8 11.0
7 93.5 11.0 15 34.4 10.8
8 70.0 10.7
Determine the regression equation.
Determine the coefficient of determination. Do you think Mr. Profit should be satisfied with using the size of the offering as the independent variable?