I know this question requires a data file that contains date ranges an price earning ratios known as data which I have but there is no way that I can upload these files. Could you give a hypothetical sense of this question possibly using hypothetical numbers. I am interested in knowing what the question is asking me to do. I am familiar with the terminology but I don't know what the question is asking me to do with it.

Brief Case Price/Earnings and Stock Value The CAPE10 index is based on the Price/Earnings (P/E) ratios of stocks. We 34.18 +6.04 +301 -135 -4.57 15 12 08 can examine the P/E ratios without applying the smoothing techniques used 58.04 -7.82 -3.72 to find the CAPE10. The file CAPE10 holds the data, giving dates, various 387.32 +9.03 +3.96 98 economic variables, CAPE10 values, and P/E values. $7354 +14.28 +2.51 252 51 32 52.09 -11.32 -213 86 Examine the P/E values. Split the data into two periods: 1870-1989 and 401.76 +9.45 +1.96 24 376 19 380 1990 to the present. Would you judge that a Normal model would be appropri- 215.68 +8.35 +3.32 158 92 +6.29 +1.03 39 65 552 29 ate for those values from the 1880s through the 1980s? Explain (and show the -13.84 -3.45 plots you made.) Now consider the more recent P/E values in this context. Do you think they have been extreme? What years, if any, appear to be particularly problem- atic? Explain