A financial analyst is examining the relationship between stock prices and earnings per share. She chooses sixteen publicly traded companies at random and records for each the company's current stock price and the company's earnings per share reported for the past 12 months. Her data are given below, with x denoting the earnings per share from the previous year, and y denoting the current stock price (both in dollars). Based on these data, she computes the least- squares regression line to be y=-0.199+0.044x. This line, along with a scatter plot of her data, is shown below. Earnings per share, x (in dollars) Current stock price, y (in dollars) 28.15 1.12 41.11 1.13 52.82 2.64 30.08 0.84 17.33 0.73 38.57 1.10 59.04 2.32 44.31 1.62 57.46 ** 2.74 x 48.62 1.77 30.02 1.31 20.16 0.77 32.32 1.52 Earnings per share (in dollars) 14.41 0.54 37.75 1.30 41.64 1.75 Send data to calculator Based on the analyst's data and regression line, answer the following. (a) From the regression equation, what is the predicted current stock price (in dollars) when the earnings per share is 14.41 dollars? Round your answer to two or more decimal places. ? 0 (b) What was the observed current stock price (in dollars) when the earnings per share was 14.41 dollars? Current stock price (In dollars) 05+ X
A financial analyst is examining the relationship between stock prices and earnings per share. She chooses sixteen publicly traded companies at random and records for each the company's current stock price and the company's earnings per share reported for the past 12 months. Her data are given below, with x denoting the earnings per share from the previous year, and y denoting the current stock price (both in dollars). Based on these data, she computes the least- squares regression line to be y=-0.199+0.044x. This line, along with a scatter plot of her data, is shown below. Earnings per share, x (in dollars) Current stock price, y (in dollars) 28.15 1.12 41.11 1.13 52.82 2.64 30.08 0.84 17.33 0.73 38.57 1.10 59.04 2.32 44.31 1.62 57.46 ** 2.74 x 48.62 1.77 30.02 1.31 20.16 0.77 32.32 1.52 Earnings per share (in dollars) 14.41 0.54 37.75 1.30 41.64 1.75 Send data to calculator Based on the analyst's data and regression line, answer the following. (a) From the regression equation, what is the predicted current stock price (in dollars) when the earnings per share is 14.41 dollars? Round your answer to two or more decimal places. ? 0 (b) What was the observed current stock price (in dollars) when the earnings per share was 14.41 dollars? Current stock price (In dollars) 05+ X
Elementary Linear Algebra (MindTap Course List)
8th Edition
ISBN:9781305658004
Author:Ron Larson
Publisher:Ron Larson
Chapter2: Matrices
Section2.CR: Review Exercises
Problem 90CR
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Transcribed Image Text:A financial analyst is examining the relationship between stock prices and earnings per share. She chooses sixteen publicly traded companies at random and
records for each the company's current stock price and the company's earnings per share reported for the past 12 months. Her data are given below, with x
denoting the earnings per share from the previous year, and y denoting the current stock price (both in dollars). Based on these data, she computes the least-
squares regression line to be y = -0.199+0.044x. This line, along with a scatter plot of her data, is shown below.
Earnings per share, x
(in dollars)
Current stock price, y
(in dollars)
28.15
1.12
41.11
1.13
52.82
2.64
30.08
0.84
17.33
0.73
+ +
38.57
1.10
59.04
2.32
44.31
1.62
57.46
2.74
+
48.62
1.77
30.02
1.31
20.16
0.77
32.32
1.52
Earnings per share
14.41
0.54
(in dollars)
37.75
1.30
41.64
1.75
Send data to calculator V
Based on the analyst's data and regression line, answer the following.
(a) From the regression equation, what is the predicted current stock price (in dollars) when the earnings per share is 14.41
dollars? Round your answer to two or more decimal places.
0
(b) What was the observed current stock price (in dollars) when the earnings per share was 14.41 dollars?
0
Current stock price
(In dollars)
+++
+
++
+
+
X
S
?
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