Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If you can't complete a calculation but need an answer to continue then make a clearly stated assumption. Conduct all tests of significance at the

image text in transcribed

If you can't complete a calculation but need an answer to continue then make a clearly stated assumption. Conduct all tests of significance at the 5% level. Q2) (10 Points) You suspect that Earning per Share (EPS) and the natural log, Ln of Sales per Share (LnSPS) are related. After you generate a regression using 30 years of quarterly data you want to test for the presence of Heteroscedasticity. You sort the data by LnSPS and break it into three equal samples from Low to High and discard the middle third. a) Based on the following data does the GQ test indicate a problem Lower Revenue Sample: Higher Revenue Sample: Adjusted R = 0.863945 Std Error of Slope = 0.349713 Standard Deviation EPS Standard Deviation Revenue = 0.217308 0.070951 b) Regardless of your conclusion above you decide to transform your data and run a WLS regression. Some of the key output is: WLS Regression Coefficent t Values Intercept 0.507052 3.7689 Slope 0.157212 2.1568 If you expect the market to report $2,525 Sales per Share next quarter what is your best estimate of EPS? If you can't complete a calculation but need an answer to continue then make a clearly stated assumption. Conduct all tests of significance at the 5% level. Q2) (10 Points) You suspect that Earning per Share (EPS) and the natural log, Ln of Sales per Share (LnSPS) are related. After you generate a regression using 30 years of quarterly data you want to test for the presence of Heteroscedasticity. You sort the data by LnSPS and break it into three equal samples from Low to High and discard the middle third. a) Based on the following data does the GQ test indicate a problem Lower Revenue Sample: Higher Revenue Sample: Adjusted R = 0.863945 Std Error of Slope = 0.349713 Standard Deviation EPS Standard Deviation Revenue = 0.217308 0.070951 b) Regardless of your conclusion above you decide to transform your data and run a WLS regression. Some of the key output is: WLS Regression Coefficent t Values Intercept 0.507052 3.7689 Slope 0.157212 2.1568 If you expect the market to report $2,525 Sales per Share next quarter what is your best estimate of EPS

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Principles Of Project Finance

Authors: Rod Morrison

1st Edition

1409439828, 9781409439820

More Books

Students also viewed these Finance questions

Question

Solve the following 1,4 3 2TT 5x- 1+ (15 x) dx 5X

Answered: 1 week ago

Question

List the components of the strategic management process. page 77

Answered: 1 week ago