A financial analyst is examining the relationship between stock prices and earnings per share. She chooses sixteen publiclytraded companies at random and records for each the company's current stock price and the company's earnings pershare reported for the past 12 months. Her data are given below, with x denoting the earnings per share from theprevious 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=-0.098 +0.043x. This line, along with a scatter plot of her data, is shown below.Earnings per share, x(in dollars)31.1220.7113.4935.3628.8251.4143.2028.5326.2556.4357.1142.3943.9816.8737.7549.10Current stock price, y(in dollars)1.710.670.671.640.742.810.921.310.982.232.781.931.450.711.301.58Current stock price(in dollars)3+25+2+1.5+0.5+01020xxxXXXXEarnings per share(in dollars)xx60X Based on the analyst's data and regression line, complete the following.(a) For these data, values for earnings per share that are greater than the mean ofthe values for earnings per share tend to be paired with current stock pricesthat are (Choose one) the mean of the current stock prices.(b) According to the regression equation, for an increase of one dollar in earningsper share, there is a corresponding increase of how many dollars in currentstock price?0xŚ

The least-squares regression line is .

Answered: Based on the analyst's data and…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Based on the analyst's data and regression line, complete the following. For these data, values for earnings per share that are greater than the mean of the values for earnings per share tend to be paired with current stock prices that are (greater than, lesser than) the mean of the current stock prices. According to the regression equation, for an increase of one dollar in earnings per share, there is a corresponding increase of how many dollars in current stock price?

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