A financial analyst engaged in business valuation obtained financial data on 53 drug companies (Industry Group SIC 3 code: 283). The file Business Valuation contains the following variables:

COMPANY— Drug Company name PB fye— Price to book value ratio (fiscal year ending) ROE— Return on equity SGROWTH— Growth (GS5)

a. Develop a regression model to predict price to book value ratio based on return on equity. 

b. Develop a regression model to predict price to book value ratio based on growth. 

c. Develop a regression model to predict price to book value ratio based on return on equity and growth. 

d. Compute and interpret the adjusted r² for each of the three models. 

e. Which of these three models do you think is the best predictor of price to book value ratio?