In an article in the Journal of Accounting Research, Ben ion Barlev and Haim Levy consider relating accounting rates on stocks and market returns Fifty four companies were selected For each company the authors recorded values of A the mean yearly accounting rate for the period 1959 to 1974, and y t...

From Minitab The regression equation is Market Rate 085 0610 Accounting Rate Pred ...

In an article in the Journal of Accounting Research, Ben/.ion Barlev and Haim Levy consider relating accounting

Question:

In an article in the Journal of Accounting Research, Ben/.ion Barlev and Haim Levy consider relating accounting rates on and market returns. Fifty-four companies were selected. For each company the authors recorded values of A. the mean yearly accounting rate for the period 1959 to 1974, and y. the mean yearly market return rate for the period 1959 to 1974. The data in Table 13.6 were obtained. Here the accounting rate can be interpreted to represent input into investment and therefore is a logical predictor of market return. Use the simple linear regression model and a computer to do the following:
TABLE 13.6
Accounting Rates on and Market Returns for 54 Companies

a. Find a point estimate of and a 95 percent confidence interval for the mean market return rate of all stocks having an accounting rate of 15.00.
b. Find a point prediction of and a 95 percent prediction interval for the market return rate of an individual stock having an accounting rate of 15.00.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...