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

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.

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a Set x 1 Total Assets x 2 ROAA x 3 Previous EPS x 4 ROAE y 01941 01485 x 1 10893 x 2 ... View full answer

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