An analyst for Phidelity Investments wants to develop a regression model to predict the annual rate of return for a stock based on the price-earnings (PE) ratio of the stock and a measure of the stock's risk. The data found in the file Phidelity.xlsx were collected for a random sample of stocks

1. Let Y 5 Return, X1 5 PE Ratio, and X2 5 Risk. Obtain the regression results for the following regression model: Y^ i 5 b0 1 b1X1i 1 b2X2i Interpret the value of R2 for this model.
2. Obtain the regression results for the following regression model: Y^ i 5 b0 1 b1X1i 1 b2X2i 1 b3X3i 1 b4X4i where X3i 5 X2 1i and X4i 5 X2 1i . Interpret the value of R2 for this model.
3. . Which of the previous two models would you recommend that the analyst use?