Use MINITAB and the following information to answer question. To find out whether there is a relationship

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Use MINITAB and the following information to answer question. To find out whether there is a relationship between the amount of financial leverage a firm uses and the return on the firm’s assets, you collect information on the debt/equity ratio and return on assets for the “big three” automakers and the average for the auto industry.

Redo question 51 using the data for the auto industry.

Question 51

Suppose you believe that in addition to there being a relationship between the return on assets and the debt/equity ratio, the return on assets in the previous period may also play an important part in determining the return on assets in the current period. You estimate the equation:image text in transcribed

(a) Use the data for Chrysler to estimate the foregoing equation.

(b) Compare your results to the simple regressions you computed in question 42.

Question 42

Estimate the regression of Chrysler’s return on assets against its debt/equity ratio. Compute the Durbin–Watson statistic. Does autocorrelation exist?

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Related Book For  book-img-for-question

Statistics For Business And Financial Economics

ISBN: 9781461458975

3rd Edition

Authors: Cheng Few Lee , John C Lee , Alice C Lee

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