To compare across in a sector, you are looking to price-to-book value ratio. Given the relationship...

  

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To compare across in a sector, you are looking to price-to-book value ratio. Given the relationship between price-to-book value (PBV) ratios, return on equity (ROE), and Standard Deviation (RISK), you are now about to value of integrated oil firms using a regression analysis. To run the regression analysis, you collect the following table which reports the PBV ratios, ROES, and Risks. Integrated Oil Firms Price-to-Book Value (PBV) Ratio Return on Equity (ROE) Standard Deviation (Risk) Firm 1 0.54 38.87% Firm 2 0.64 55.57% Firm 3 0.95 Firm 4 1.45 Firm 5 1.72 Firm 6 2.15 Firm 7 2.40 Firm 8 3.03 Firm 9 3.24 Firm 10 3.53 Intercept ROE Risk 1. Regress of PBV on ROE and you will have the following results. Fill in the blanks (Note: Round to the nearest tenth. e.g. 3.452 => 3.5) Coefficients 1.8 Firm 4 Firm 5 Firm 6 Firm 7 Firm 8 Firm 9 Firm 10 0.95 1.45 1.72 2.15 2.40 3.03 3.24 7.47% -4.83% t-Statistics 0.82 1.10 -0.47 2. Using the estimated regression model from the above result, calculate the respective predicted PBV multiples and fill in the blanks (Note: Round to the nearest hundredth. e.g. 3.452 => 3.45) Integrated Oil Firms Price-to-Book Value (PBV) Ratio Predicted PBV multiples Firm 1 0.54 1.66 Firm 2 0.64 0.31 Firm 3 3.53 6.28% 10.33% 13.96% 16.44% 14,49% 15.69% 13,43% 10.67% 55.23% 31.66% 19.56% 39.47% 27.80% 26.44% 26.82% 34.90% 2.57 2.40 2.46 2.59 To compare across in a sector, you are looking to price-to-book value ratio. Given the relationship between price-to-book value (PBV) ratios, return on equity (ROE), and Standard Deviation (RISK), you are now about to value of integrated oil firms using a regression analysis. To run the regression analysis, you collect the following table which reports the PBV ratios, ROES, and Risks. Integrated Oil Firms Price-to-Book Value (PBV) Ratio Return on Equity (ROE) Standard Deviation (Risk) Firm 1 0.54 38.87% Firm 2 0.64 55.57% Firm 3 0.95 Firm 4 1.45 Firm 5 1.72 Firm 6 2.15 Firm 7 2.40 Firm 8 3.03 Firm 9 3.24 Firm 10 3.53 Intercept ROE Risk 1. Regress of PBV on ROE and you will have the following results. Fill in the blanks (Note: Round to the nearest tenth. e.g. 3.452 => 3.5) Coefficients 1.8 Firm 4 Firm 5 Firm 6 Firm 7 Firm 8 Firm 9 Firm 10 0.95 1.45 1.72 2.15 2.40 3.03 3.24 7.47% -4.83% t-Statistics 0.82 1.10 -0.47 2. Using the estimated regression model from the above result, calculate the respective predicted PBV multiples and fill in the blanks (Note: Round to the nearest hundredth. e.g. 3.452 => 3.45) Integrated Oil Firms Price-to-Book Value (PBV) Ratio Predicted PBV multiples Firm 1 0.54 1.66 Firm 2 0.64 0.31 Firm 3 3.53 6.28% 10.33% 13.96% 16.44% 14,49% 15.69% 13,43% 10.67% 55.23% 31.66% 19.56% 39.47% 27.80% 26.44% 26.82% 34.90% 2.57 2.40 2.46 2.59

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