Question

A researcher estimates the following model relating the return on a firm’s stock as a function of its price-to-earnings ratio and its price-to-sales ratio: Return = β0 + β1P/E +
β2P/S + . A portion of the regression results is shown in the accompanying table.

.:.
a. Specify the sample regression equation.
b. At the 10% significant level, are P/E and P/S jointly significant? Show the relevant steps of the appropriate hypothesis test.
c. Are both explanatory variables individually significant at the 10% significance level? Show the relevant steps of the appropriate hypothesis tests.



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  • CreatedJanuary 28, 2015
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