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A finance executive would like to determine if a relationship exists between the current earnings per share (EPS) of a bank and the following independent
A finance executive would like to determine if a relationship exists between the current earnings per share (EPS) of a bank and the following independent variables below. ROAA measures how effectively assets are utilized, and ROAE measures a firm's profitability. Complete parts a through e below. X1 - Total assets ($ billions) X2 - Previous period's return on average assets (ROAA) X3 - Previous period's EPS X4 - Previous period's return on average equity (ROAE) a) Construct a regression model using all four independent variables. y = (0) + () *1 + () *2 + () *3 + () x4 (Round to three decimal places as needed.) b) Interpret the meaning of the regression coefficients. Select the correct choice below and, if necessary, fill in the answer boxes within your choice. Each additional billion dollars of total assets the current EPS by Each additional percentage point for the previous period's ROAA the current EPS by V Each additional dollar for the previous period's EPS the current EPS by Each additional percentage point for the previous period's ROAE the current EPS by c) Predict the average EPS for a bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162%. y = dollars (Round to two decimal places as needed.) d) Construct a 95% confidence interval for the bank described in part c. Interpret the meaning of the interval. The 95% confidence interval is from a lower limit of dollars to an upper limit of dollars. (Round to two decimal places as needed.) Interpret the meaning of the interval. Select the correct choice below and fill in the answer boxes within your choice. (Round to two decimal places as needed.) O A. The average EPS for a bank that has $4.1 billion in total assets, ROAA= - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% between a lower limit of and an upper limit of 95% of the time.Interpret the meaning of the interval. Select the correct choice below and fill in the answer boxes within your choice. (Round to two decimal places as needed.) A. The average EPS for a bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% between a lower limit of and an upper limit of 95% of the time. O B. It can be stated with 95% confidence that the average EPS for a bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% is between a lower limit of and an upper limit of C. It can be stated with 95% confidence that the EPS for a bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% is between a lower limit of and an upper limit of e) Construct a 95% prediction interval for the bank described in part c, that is, a bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162%. Interpret the meaning of the interval. The 95% prediction interval is from a lower limit of dollars to an upper limit of |dollars. (Round to two decimal places as needed.) Interpret the meaning of the interval. Select the correct choice below and fill in the answer boxes within your choice. (Round to two decimal places as needed.) O A. The point differential for a particular bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% is between a lower limit of and an upper limit of 95% of the time. B. It can be stated with 95% confidence that the EPS for a particular bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% is between a lower limit of and an upper limit of C. It can be stated with 95% confidence that the average EPS for a bank that has $4.1 billion in total assets, ROAA = - 0.8%, EPS(previous) = $0.65, and ROAE = - 162% is between a lower limit of and an upper limit ofData set for several banks - X Company ($) ($ Billions) RUAA (%) ($) 3.48 (%) 5.118 2.56 1.34 25.81 2 1.51 1.902 1.33 1.42 16.09 2.34 2.259 1.03 0.65 13.01 1.39 1.377 0.83 1.46 13.94 0.26 3.674 0.73 0.36 11.05 0.53 3.782 0.62 0.71 8.74 0.54 1.533 0.52 1.22 8 6.41 0.08 1.019 0.44 0.12 g 2.52 0.43 1.761 0.41 0.43 10 4.97 0.21 2.487 0.28 0.91 11 2.56 0.08 1.225 0.19 0.01 12 1.19 - 0.14 1.635 0.02 0.17 13 0.15 - 0.02 2.419 - 0.03 - 1.11 14 - 0.28 - 0.43 3.092 - 0.25 0.23 15 - 0.19 - 1.62 1.883 - 0.39 - 0.98 - 4.68 16 1.79 1.303 - 0.72 1.06 17 - 10.48 - 1.87 1.132 - 1.17 0.15 18 - 12.23 - 9.56 2.428 - 1.68 - 1.04 19 1.57 - 29.69 1.055 - 2.27 - 0.03 20 - 17.57 - 1.91 3.334 - 2.98 - 2.16 21 - 45.91 - 2.99 1.756 - 4.07 - 7.52 22 - 94.71 - 5.18 1.031 - 6.25 - 1.27 23 - 115.85 - 6.58 1.296 - 11.48 0.11 - 309.25
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