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.
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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Please fill in the blanks and select the correct answers over the image provided. Thank you
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
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
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