A finance executive would like to determine if a relationship exists between the current earnings per share (EPS) of a bank and the following independent variables:
• Total assets ($ billions)
• Previous period’s EPS
• Previous period’s return on average assets (ROAA)
• Previous period’s return on average equity (ROAE)
ROAA measures how effectively assets are utilized, and ROAE measures a firm’s profitability. The Excel file Bank EPS.xlsx contains these data for several banks.
a. Construct a regression model using all three independent variables.
b. Calculate the multiple coefficient of determination.
c. Test the significance of the overall regression model using α = 0.05.
d. Calculate the adjusted multiple coefficient of determination.

  • CreatedJuly 29, 2015
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