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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
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. Click the icon to view the business valuation data. a. Develop a regression model to predict price-to-book-value ratio based on return on equity. 2.3225 0.0701 Xi (Round to four decimal places as needed.) b. Develop a regression model to predict price-to-book-value ratio based on growth. = 3.1142 +0.0311 X2i (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. =1.9283 +0.06 X + 0.0221 X2i (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 32.9 % of the variation in price-to-book-value is explained by return on equity (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 (Round to one decimal place as needed.) is explained by after correcting for the number of independent variables in the model. correcting for the number of independent variables in the model. The adjusted r 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.) Business Valuation Data Price/Book Value Return on Equity Growth % Ratio 1.421 12.907 6.428 8.173 11.769 135.729 1.975 12.431 0.034 6.625 25.123 14.264 1.254 8.807 22.731 3.249 37.966 19.162 2.483 25.578 24.699 5.239 19.634 11.757 2.291 22.812 49.905 7.665 69.777 36.727 0.479 3.792 41.008 2.505 9.138 28.802 7.565 29.113 51.974 5.179 17.725 25.086 2.105 29.269 23.873 4.699 31.377 9.592 2.124 14.854 18.518 4.063 11.994 39.185 1.919 14.266 39.474 1.507 14.143 27.086 1.921 14.853 13.225 5.014 20.652 17.235 2.358 14.789 15.964 2.171 5.603 16.711 2.878 11.155 8.225 1.784 16.161 18.386 5.631 23.927 16.699 4.673 14.684 46.604 2.613 6.185 34.188 1.675 19.114 8.434 8.368 38.942 15.089 2.228 15.238 25.217 2.795 19.768 0.196 7.379 18.434 3.298 3.227 20.616 9.592 2.885 34.687 7.146 2.404 15.477 9.505 1.125 10.387 4.652 3.077 23.616 4.127 10.172 91.461 13.262 1.954 1.645 15.937 1.601 9.455 5.667 1.934 19.337 0.021 7.257 5.011 102.782 1.211 42.832 1.529 5.799 90.829 73.993 6.482 19.318 9.027 2.655 27.304 34.528 3.356 12.942 12.194 6.968 24.674 11.674 13.704 82.001 24.653 4.074 1.456 20.185 7.257 3.667 22.209 6.024 31.519 49.769 1.102 5.093 13.194 9.275 47.877 61.236 1.213 13.415 10.749 0.924 35.948 9.154 3.812 28.631 71.021 3.593 18.138 51.855 2.212 13.977 16.984 10.045 133.082 171.421 4.223 21.958 8.547 8.577 11.268 247.682 1.989 17.235 10.726 3.986 19.392 6.482 2.341 8.485 24.601 2.937 18.666 14.328 4.431 21.623 5.733 5.117 49.577 31.386 2.132 19.394 3.899
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