$2$ A research analyst is trying to determine whether a firm's price$-$earnings $($PE$)$ and price$-$sales $($PS$)$ ratios can explain the firm's stock

performance over the past year. A PE ratio is calculated as a firm's share price compared to the Income or profit earned by the firm per

share. Generally, a high PE ratlo suggests that Investors are expecting higher earnings growth in the future compared to companies

Wth a lower PE ratio. The PS ratlo is calculated by dividing a firm's share price by the firm's revenue per share for the tralling $12$

months. In short, Investors can use the PS ratlo to determine how much they are paying for a dollar of the firm's sales rather than a

portlon of the year$-$to$-$date returns $($Return in $\%)$ and the PE and PS ratlos for $30$ firms.

a$-1.$ Estimate: Return $=a_9+{}_{1}PE+{}_{2}PS+.($Negative values should be indicated by a minus sign. Round your answers to $2$

decimal places.$)$

$\backslash$table$[[$Predicted Return $=,,+,PE+,]]$

a$-2$ Are the signs on the coefficients as expected?

$(6$es $0$

No

b$.$ Interpret the slope coefficlent of the PS ratio.

As the PS ratio increases by $1$ unlt, the predicted return of the firm increases by $3\mathrm{.}37\%,$ holding PE constant.

As the PS ratio increases by $1$ unit, the predicted return of the firm decreases by $33\mathrm{.}09\%,$ holding PE constant.

As the PS ratlo decreases by $1$ unlt, the predicted return of the firm decreases by $33\mathrm{.}09\%,$ holding PE constant.

As the PS ratlo increases by $1$ unlt, the predicted return of the firm decreases by $3\mathrm{.}37\%,$ holding PE constant $o.$

c$.$ What is the predicted return for a firm with a PE ratio of $10$ and a PS ratio of $2?($Negatlve value should be indicated by a minus

sign. Do not round intermediate calculations. Round final answer to $2$ decimal places.$)$

Predicted Return

d$.$ What is the standard error of the estimate? $($Round your answer to $2$ decimal places.$)$