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. PLEASE RUN SPSS OR STATCRUNCH TO OBTAIN THE REQUIRED DATA TO ANSWER THE QUESTIONS BELOW! Be prepared to RUN SPSS OR STATCRUNCH in other questions In this module tool Business Valuation Data Price/Book Value Ratio Return on Equity Growth% D 1.529 13.001 6.494 8.262 11.883 135:617 a. Develop a regression model to predict price-to-book-value ratio based on return on equity 2 074 12 345 0.124 6.603 25.065 14.237 1.284 8.771 22.682 3.189 19.041 (Round to three decimal places as needed.) 37.958 2.522 25.639 24.633 b. Develop a regression model to predict price-to-book-value ratio based on growth. 5.277 19.604 11.683 2.373 22.802 49.819 7.659 69.718 36.635 (Round to three decimal places as needed.) 0.494 3.787 41.099 2 541 9.166 28.96 c. Develop a regression model to predict price-to-book-value ratio based on return on equity and growth. 7 549 29 126 51.964 5.232 17.684 25.053 2.181 29.268 23.882 (Round to three decimal places as needed.) 4.876 31.468 9.533 2 109 14.728 18.433 d. Compute and interpret the adjusted r for each of the three models. 4.019 11.929 39.152 Start with the part (a) model. 1.898 14.169 39.533 1.561 14.104 27.012 The adjusted r shows that |% of the variation in is explained by correcting for the number of independent variables in the model 2 037 14.894 13 24 (Round to one decimal place as needed.) 4.975 20.684 17 19 2.322 14.912 15.934 Compute and interpret the adjusted r for the part (b) model. 2.101 5.581 16.682 2.884 11.264 8.275 The adjusted r shows that % of the variation in is explained by correcting for the number of independent variables in the model 1.823 16.266 18.231 Round to one decimal place as needed.) 5.466 23.948 16.763 4.734 14.661 46.456 Compute and interpret the adjusted r for the part (c) model. 2512 6.226 33.995 1.734 19.044 8.495 The adjusted r shows that %% of the variation in is explained by correcting for the number of independent variables in the model. 8.342 38.889 15.086 Round to one decimal place as needed.) 2.266 15.091 25.17 2.907 18 799 0.304 e. Which of these three models do you think is the best predictor of price-to-book-value ratio? 7.542 18.355 3 304 20.719 value of 3.26 9.46 The model from |is the best predictor of price-to-book-value ratio because it has the 2.819 34.616 7.072 2416 15.44 9.515 1.232 10.303 4.727 3.061 23.482 4.088 10 303 91 469 13.319 2.119 1.567 15.965 1.651 9.455 5.738 2.087 19.342 0.103 7 175 5.07 102.694 1.387 42.849 1.586
