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You are an analyst for a managed mutual fund. You have been given the task of investigating whether any significant relationship exists between a companys
- You are an analyst for a managed mutual fund. You have been given the task of investigating whether any significant relationship exists between a companys profitability (ROE) and its environmental, social and governance (ESG) ratings and management (CEO) turnover. A regression is performed with ROE (in percent) as the dependent variable and CEO tenure (in years) and ESG rating as the independent variables. A sample of 40 large cap companies was used. The regression results are given below
Coefficient | Standard Error | t-Stat | p-Value | |
Intercept | 9.442 | 3.343 | 2.824 | 0.008 |
ESG | 0.069 | 0.058 | 1.201 | 0.238 |
Tenure | 0.681 | 0.295 | 2.308 | 0.027 |
ANOVA | SS | MSS | F | Significance F |
Regression | 240.410 | 120.205 | 4.161 | 0.023 |
Residual | 1069.000 | 28.892 | ||
Total | 1309.410 | |||
Multiple R | 0.428 | |||
R2 | 0.183 | |||
Adjusted R2 | 0.139 |
- You are an advisor at a consulting firm that provides advice to a select group of individual investors with large portfolios. During the firms weekly management meeting, the following questions about economic indicators were addressed to you. In 4-5 sentences per question, provide your answers.
- Why does the federal funds rate matter to stock prices? How do low rates impact stock prices?
- Some of your associates doubt that there is a strong relationship between the stock market and the economy because they heard that stock prices typically turn before the economy does. Do you agree? (This is a different question so please read it thoroughly and answer it correctly)
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