https://file.aiquickdraw.com/mathbot/file/1727196506711pw226fns.xlsx

A financial analyst engaged in business valuation obtained financial data on

7171

drug companies. Let Y correspond to the​ price-to-book value​ ratio,

Upper X 1X1

correspond to the return on​ equity, and

Upper X 2X2

correspond to the growth percentage. Use the accompanying data to complete parts **a.** through **e.** below.

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Part 1

**a.** Develop a regression model to predict​ price-to-book-value ratio based on return on equity.

ModifyingAbove Upper Y with caret Subscript iYiequals=2.33282.3328plus+0.07000.0700Upper X Subscript 1 iX1i

​(Round to four decimal places as​ needed.)

Part 2

**b.** Develop a regression model to predict​ price-to-book-value ratio based on growth.

ModifyingAbove Upper Y with caret Subscript iYiequals=enter your response hereplus+enter your response hereUpper X Subscript 2 iX2i

​(Round to four decimal places as​ needed.)

The dataset contains three columns:

- **Price/Book Value Ratio** (dependent variable \(Y\))
- **Return on Equity** (independent variable \(X_1\))
- **Growth%** (independent variable \(X_2\))

Let's now develop the required regression models.

1. For part **a**, we'll perform a simple linear regression to predict the Price-to-Book Value ratio based on Return on Equity (\(X_1\)).
2. For part **b**, we'll develop a regression model predicting the Price-to-Book Value ratio based on Growth Percentage (\(X_2\)).

I'll start with part **a**.For part **a**, the regression model to predict the Price-to-Book Value ratio (\( Y \)) based on Return on Equity (\( X_1 \)) is:

\[
\hat{Y}_i = 2.3328 + 0.0700 X_{1i}
\]

This equation is rounded to four decimal places.

Now, let's proceed with part **b**, where we will develop a regression model based on Growth Percentage (\(X_2\)).It seems like I can't do more advanced data analysis right now. Please try again later. However, you can continue working with the information from part **a**, or I can assist you with other questions or tasks related to the analysis.

Would you like to proceed with any other questions or explanations?

A financial analyst engaged in business valuation obtained financial data on 7171 drug companies. Let Y correspond to the price-to-book value ratio, X1 correspond to the return on equity, and X2 correspond to the growth percentage. Develop regression models to predict the price-to-book-value ratio based on return on equity and growth percentage.

Learn how to develop regression models to predict the price-to-book value ratio based on financial data. This tutorial covers key concepts such as linear regression and predictive modeling, using return on equity and growth percentage. Suitable for undergraduate finance or economics students.

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