Profitability remains a challenge for banks and thrifts with less than $2 billion of assets. The businessproblem facing a bank analyst relates to the factors that affect return on assets (ROA), an indicator ofhow profitable a company is relative to its total assets.Data collected from a sample of 20 community banks include the ROA (%), the efficiency ratio (%), asa measure of bank productivity (the lower the efficiency ratio, the better), and total risk-based capital(%), as a measure of capital adequacy.a. State the multiple regression equation.Let X1i represent the efficiency ratio (%) and let X2i represent the total risk-based capital (%).(Round the constant to two decimal places as needed. Round the coefficients to four decimal placesas needed.)b. Interpret the meaning of the slopes, b1 and b2, in this problem

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ROA Efficiency Ratio 45.81 54.72 57.05 70.52 81.6 72.79 65.46 62.97 72.02 47.42 67.37 59.25 58.22 50.93 64.53 62.47 68.29 72.8 61.42 57.09 1.45 1.07 1.32 1.44 0.59 0.6 0.9 0.9 1.74 1.14 0.83 0.96 0.87 0.82 0.9 1.17 0.99 0.68 0.97 1.06 Total RiskBased Capital 20.77 16.02 13.16 22.86 15.08 13.88 16.12 13.56 22.27 17.2 15.76 13.21 14.35 13.39 13.64 11.67 13.38 14.14 12.62 14.62 ROA Efficiency Ratio 45.81 54.72 57.05 70.52 81.6 72.79 65.46 62.97 72.02 47.42 67.37 59.25 58.22 50.93 64.53 62.47 68.29 72.8 61.42 57.09 1.45 1.07 1.32 1.44 0.59 0.6 0.9 0.9 1.74 1.14 0.83 0.96 0.87 0.82 0.9 1.17 0.99 0.68 0.97 1.06 Total RiskBased Capital 20.77 16.02 13.16 22.86 15.08 13.88 16.12 13.56 22.27 17.2 15.76 13.21 14.35 13.39 13.64 11.67 13.38 14.14 12.62 14.62

Answer rating: 100% (QA)

a The multiple regression equation is given by ROAi beta0 beta1X1i beta2X2i varepsiloni Where ROAi i... View the full answer