performance over the past year. A PE ratio is calculated as a firm's shar higher earnings growth in the future compared to companles share. Generally, a high PE ratio suggests that Investors are expecting he price by the firm's revenue per share for the tralling $12$ With a lower PE ratio. The PS ratlo is calculated by diving a firm's share phey are paying for a dollar of the firm's sales rather than a months. In short, investors can use the PS ratio to determine how muche attractive the Investment. The accompanying table shows a dollar of its earnings $($PE ratio$).$ In general, the lower the PS ratio, $4.$ portion of the year$-$to$-$date returns $($Retum in $\%)$ and the PE and PS ratios for $30$ firms

$\backslash$table$[[$Fire$,$Return,PE$,$PS$],[1,4\mathrm{.}7,14\mathrm{.}36,2\mathrm{.}44],[2,-4\mathrm{.}2,11\mathrm{.}02,0\mathrm{.}79],[1,1,1,1],[30,16\mathrm{.}6,13\mathrm{.}98,1\mathrm{.}96]]$

Click here for the Excel Data File

Q$-1.$ Estmate: Return $=lo{n}_6+{}_{1}PE+{}_{2}PS+($Negatlve values should be Indicated by a minus sign. Round your answers to $2$ decimal places.$)$

Predicted Return $=$

$PE+$

PS

Q$-2$ Are the signs on the coefficlents as expected?

$$ Yes

No

b$.$ Interpret the slope coefficient of the PS rato.

As the PS ratio increases by $1$ unit, the predicted return of the firm decreases by $33\mathrm{.}33\%,$ holding PE constant. As the PS ratio increases by $1$ unit, the predicted return of the firm increases by $3\mathrm{.}42\%,$ holding PE constant. As the PS ratio increases by $1$ unit, the predicted retum of the firm decreases by $3\mathrm{.}42\%,$ holding PE constant As the PS ratio decreases by $1$ unit, the predicted return of the firm decreases by $33\mathrm{.}33\%,$ holding PE constant.

c$.$ What Is the predicted return for a firm with a PE ratlo of $10$ and a PS ratlo of $2?($Negatlve value should be indlcated by a minus sign. Do not round Intermedlate calculations. Round final answer to $2$ decimal places.$)$

Predicted Returm

d$.$ What is the standard error of the estimate? $($Round your answer to $2$ decimal places.$)$

$$

e$.$ Interpret ${}^2$

$40\mathrm{.}46\%$ of the sample variation in $y$ is explained by the sample regression equation.

$40\mathrm{.}46\%$ of the sample variation in $x$ is exploined by the sample regression equation.

$63\mathrm{.}61\%$ of the sample variation in $x$ is explained by the sample regression equation.

$36\mathrm{.}05\%$ of the sample variation in $y$ is explained by the sample regression equation.

PROTECTED VIEW

Be careful$-$files from the internet can

Ready

Ready

Ready