A financial analyst engaged in business valuation obtained financial data on 71 drug companies. Let Y correspond to the price-to-book value ratio, X1 correspond to the return on equity, and X2 correspond to the growth percentage. Use the accompanying data to complete parts a. through e. below.

d. Compute and interpret the adjusted r2 for each of the three models.

Start with the part (a) model. The adjusted r2 shows that ____ % of the variation in price-to-book-value/ return on equity

is explained by price-to-book-value/ return on equity after/before correcting for the number of independent variables in the model.

(Round to one decimal place as needed.)

Compute and interpret the adjusted r2 for the part (b) model.The adjusted r2 shows that ____% of the variation in price-to-book-value/ growth

is explained by price-to-book-value/ growth before/ after correcting for the number of independent variables in the model.

(Round to one decimal place as needed.)

Compute and interpret the adjusted r2 for the part (c) model.The adjusted r2 shows that ___%

of the variation in return on equity and growth / price-to-book-value is explained by return on equity and growth / price-to-book-value

before/ after 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

part (a)

part (b)

part (c)

is the best predictor of price-to-book-value ratio because it has the largest/smallest

value of adjusted r2 / r2/ r

73 a. Develop a regression model to predict price-to-book-value ratio based on return on equity. Y^i=1.9332+0.0603X1i (Round to four decimal places as needed.) b. Develop a regression model to predict price-to-book-value ratio based on growth. Y^i=+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. Y^i=[+x1i+x2i (Round to four decimal places as needed.) d. Compute and interpret the adjusted r2 for each of the three models. Start with the part (a) model