# Question

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 four independent variables.

b. Interpret the meaning of the regression coefficients.

c. Predict the average EPS for a bank that has $ 2.6 billion in total assets and the following results from the previous period: ROAA = 1.5%, EPS = $ 1.80, ROAE = 8%.

d. Construct a 95% confidence interval for the average EPS for a bank described in part c. Interpret the meaning of the interval.

e. Construct a 95% prediction interval for the EPS for a bank described in part c. Interpret the meaning of the interval.

• 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 four independent variables.

b. Interpret the meaning of the regression coefficients.

c. Predict the average EPS for a bank that has $ 2.6 billion in total assets and the following results from the previous period: ROAA = 1.5%, EPS = $ 1.80, ROAE = 8%.

d. Construct a 95% confidence interval for the average EPS for a bank described in part c. Interpret the meaning of the interval.

e. Construct a 95% prediction interval for the EPS for a bank described in part c. Interpret the meaning of the interval.

## Answer to relevant Questions

Suppose the athletic director at Villanova University would like to develop a regression model to predict the point differential for games played by the college’s men’s basketball team. A point differential is the ...Consider the following time series: a. Using a trend projection, forecast the demand for Period 9. b. Verify your results using PHStat. c. Calculate the MAD for this forecast. The following table shows the number of cell phone minutes used per month on my family plan for the past eight months. These data can also be found in the Excel file cell phone minutes.xlsx. a. Construct a graph showing the ...Suppose Bellevue University accepts new students into its program year round on a tri semester schedule (Fall, Spring, and Summer). Forecasting future enrollments helps the school ensure it has the proper resources to ...Deloitte is a firm that conducts an annual survey that gauges consumer spending expectations during the year end holiday season. The following data show the percentage of respondents who indicated that they would spend less ...Post your question

0