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CMA Intermediate · Financial Management and Business Data Analytics · Introduction to Data Science for Business Decision-making

An analyst wants to examine whether advertising spend and sales of a company move together over 24 months, before building any model. Which exploratory tool is most suitable?

A scatter plot with the correlation coefficient is most suitable. It plots advertising spend against sales for each month, showing the direction and strength of their relationship, whereas pie charts, frequency tables and single-variable box plots describe only one variable or composition.

  1. AA scatter plot with the correlation coefficientCorrect
  2. BA pie chart of advertising spend by month
  3. CA frequency table of sales by product code
  4. DA box plot of advertising spend alone

Explanation

Relationship between two numeric variables is explored with a scatter plot and correlation coefficient. A pie chart shows composition, a frequency table summarises one categorical variable, and a single-variable box plot cannot show joint movement.

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