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Develop a regression model to predict price-to-book-value ratio based on return on equity.

Develop a regression model to predict price-to-book-value ratio based on return on equity.

Holt Mcdougal Larson Pre-algebra: Student Edition 2012
Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter7: Percents
Section7.5: Percent Of Change
Problem 15E
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A financial analyst engaged in business valuation obtained financial data on 71 drug companies. Let Y correspond to the price-to-book value ratio, X, correspond to the return on equity, and X2 correspond to the growth percentage. Use the accompanying data to complete parts a. through e. below. E Click the icon to view the business valuation data. PLEASE RUN SPSS OR STATCRUNCH TO OBTAIN THE REQUIRED DATA TO ANSWER THE QUESTIONS BELOWI Be prepared to RUN SPSS OR STATCRUNCH in other questions in this module too! a. Develop a regression model to predict price-to-book-value ratio based on return equity. (Round to four decimal places. needed.) b. Develop a regression model to predict price-to-book-value ratio based on growth. (Round to four decimal places as needed.) c. Develop a regression model to predict price-to-book-value ratio based on return on equity and growth. (Round to four decimal places as needed.) d. Compute and interpret the adjusted r for each of the three models. Start with the part (a) model. The adjusted r? shows that% of the variation in V is explained by V correcting for the number of independent variables in the model. (Round to one decimal place as needed.) Compute and interpret the adjusted r for the part (b) model. The adjusted r shows that % of the variation in V is explained by V correcting for the number of independent variables in the model. (Round to one decimal place as needed.) Compute and interpret the adjusted ? for the part (c) model. The adjusted shows that % of the variation in is explained by correcting for the number of independent variables in the model. (Round to one decimal place as needed.) e. Which of these three models do you think is the best predictor of price-to-book-value ratio? The model from V is the best predictor of price-to-book-value ratio because it has the V value of
Transcribed Image Text:A financial analyst engaged in business valuation obtained financial data on 71 drug companies. Let Y correspond to the price-to-book value ratio, X, correspond to the return on equity, and X2 correspond to the growth percentage. Use the accompanying data to complete parts a. through e. below. E Click the icon to view the business valuation data. PLEASE RUN SPSS OR STATCRUNCH TO OBTAIN THE REQUIRED DATA TO ANSWER THE QUESTIONS BELOWI Be prepared to RUN SPSS OR STATCRUNCH in other questions in this module too! a. Develop a regression model to predict price-to-book-value ratio based on return equity. (Round to four decimal places. needed.) b. Develop a regression model to predict price-to-book-value ratio based on growth. (Round to four decimal places as needed.) c. Develop a regression model to predict price-to-book-value ratio based on return on equity and growth. (Round to four decimal places as needed.) d. Compute and interpret the adjusted r for each of the three models. Start with the part (a) model. The adjusted r? shows that% of the variation in V is explained by V correcting for the number of independent variables in the model. (Round to one decimal place as needed.) Compute and interpret the adjusted r for the part (b) model. The adjusted r shows that % of the variation in V is explained by V correcting for the number of independent variables in the model. (Round to one decimal place as needed.) Compute and interpret the adjusted ? for the part (c) model. The adjusted shows that % of the variation in is explained by correcting for the number of independent variables in the model. (Round to one decimal place as needed.) e. Which of these three models do you think is the best predictor of price-to-book-value ratio? The model from V is the best predictor of price-to-book-value ratio because it has the V value of
Business Valuation Data Price/Book Value Return on Equity Growth % Ratio 1.474 12.885 6.398 8.168 11.933 135.599 2.031 12.338 0.122 6.523 25.242 14.156 1.312 8.725 22.716 3.214 38.023 18.977 2.378 25.742 24.638 5.204 19.626 11.755 2.409 22.774 49.975 7.745 69.666 36.627 0.447 3.714 41.021 2.573 9.259 28.818 7.525 29.291 51.968 5.199 17.829 25.128 2.084 29.247 23.821 4.717 31.524 9.486 2.276 14.683 18.404 4.146 11.938 39.066 39.448 1.891 14.191 1.431 14.187 27.112 1.882 14.814 13.221 5.021 20.532 17.267 2.394 14.866 15.892 1.997 5.675 16.775 2.862 11.185 8.286 1.725 16.087 18.405 5.596 24.024 16.722 4.696 2.558 14.733 46.548 6.288 34.184 1.743 19.058 8.555 8.481 38.885 15.094 25.126 2.326 15.203 2.897 19.693 0.281 7.508 18.296 3.203 3.234 20.727 34.787 9.563 2.816 7.101 2.489 15.544 9.417 1.149 10.352 4.681 3.041 23.662 91.499 4.121 10.274 13.295 Print Done
Transcribed Image Text:Business Valuation Data Price/Book Value Return on Equity Growth % Ratio 1.474 12.885 6.398 8.168 11.933 135.599 2.031 12.338 0.122 6.523 25.242 14.156 1.312 8.725 22.716 3.214 38.023 18.977 2.378 25.742 24.638 5.204 19.626 11.755 2.409 22.774 49.975 7.745 69.666 36.627 0.447 3.714 41.021 2.573 9.259 28.818 7.525 29.291 51.968 5.199 17.829 25.128 2.084 29.247 23.821 4.717 31.524 9.486 2.276 14.683 18.404 4.146 11.938 39.066 39.448 1.891 14.191 1.431 14.187 27.112 1.882 14.814 13.221 5.021 20.532 17.267 2.394 14.866 15.892 1.997 5.675 16.775 2.862 11.185 8.286 1.725 16.087 18.405 5.596 24.024 16.722 4.696 2.558 14.733 46.548 6.288 34.184 1.743 19.058 8.555 8.481 38.885 15.094 25.126 2.326 15.203 2.897 19.693 0.281 7.508 18.296 3.203 3.234 20.727 34.787 9.563 2.816 7.101 2.489 15.544 9.417 1.149 10.352 4.681 3.041 23.662 91.499 4.121 10.274 13.295 Print Done
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