Question: A formula in financial analysis is Return on equity = net profit margin total asset turnover equity multiplier. Suppose that the equity multiplier is fixed
A formula in financial analysis is Return on equity net profit margin total asset turnover equity multiplier. Suppose that the equity multiplier is fixed at but that the net profit margin is norma distributed with a mean of and a standard deviation of and that the total asset turnover is normally distributed with a mean of and a standard deviation of Set up and conduct a sampling experiment to find the distribution of the return on equity. Show how the results as a histogram would help explain your analysis and conclusions.
Place "Equity Multiplier," "Net Profit Margin Mean," "Net Profit Margin Std Dev," "Total Asset Mean," and "Total Asset Std Dev" in column A in rows and respectively, and place their corresponding values in column B Place the column headers "Net Profit Margin," "Total Asset Turnover," and "Return on Equity" in cells C D and E respectively. To generate random number for the net profit margin based on the normal distribution, in the cells in the "Net Profit Margin" column, enter the formula NORM.INV $ $ in the cells in column below To generate random numbers for the total asset turnover based on the normal distribution, in the cells in the "Total Asset Turnover" column, enter the formula NORM.INV in the cells in column D below D To calculate return on equity distribution values, in the cells in column below multiply pairs of values in the "Net Profit" and "Total Asset Turnover" columns by the value in cell
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