Electric Utility Stock Prices and Potentially Relevant Data 1.52 Problem 2: Stock market analysis are continually looking for reliable predictors of stock prices. Consider the problem of modeling the price per share of electric utility stocks. Two variables thought to influnce this stock price are return on average equity and annual dividend rate. The stock price, returns on equity, and divident rates on a randomly selected day for 16 electric utility stocks are provided on the left. Estimate a multiple regression model using the given data. Interpret each of the estimated regression Problem 3: In Problem 2, assuming you believe there will be an impact on the stock price depending on the fact if the average return on equity is greater than 13% or not. How would you test your believe? (Assuming the significance level is 10%). How do you interpret the results? In addtion, in problem 2, estimate a multiple regression model by adding an interaction variable consisting of return on average equity and annual dividend rate. Which of the three explanatory variables should be in included in the final version of the regression model? Please Explain. Does this revised model with interaction variable fit the given data better than the one in Problem 2? Why or why not? Stock Price $23 Return AverageEquity Annual_DividendRate $34 13.7 12.8 2.36 $20 6.9 3.12 2.48 $24 12.7 2.36 $20 15.3 1.92 $13 13.3 1.60 $33 14.6 3.08 $15 15.8 $26 12.0 2.72 $25 15.3 2.56 $26 15.2 2.80 $20 13.7 1.92 $28 15.4 2.92 $25 15.2 2.60 $30 17.3 2.76 $20 13.9 2.14