Concept explainers
Refer to the discussion of beta values and market models in Problem 13.49 on page 513. The S&P 500 Index tracks the overall movement of the stock market by considering the stock prices of 500 large corporations. The file StockPrices2016 contains 2016 weekly data for the S&P 500 and three companies. The following variables are included:
Cases
WEEK- Week ending on date given
S&P-Weekly closing value for the S&P 500 index.
GE-Weekly closing stock price for General Electric
DISCA- Weekly closing stock price for Discovery Communications
GOOG-Weekly closing stock price for Google
a. Estimate the market model for GE. (Hint: Use the percentage change in the S&P Index as the independent variable and the percentage change in GE’s stock price as the dependent variables.)
b. Interpret the beta value for GE.
c. Repeat (a) and (b) for Discovery Communications.
d. Repeat (a) and (b) for Google.
e. Write a brief summary of your findings.
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Basic Business Statistics
- Problem 3 addressed the cross-sectional variation in the number of financial analysts who follow a company. in that problem, company size and debt-to-equity ratios were the in- dependent variables. you receive a suggestion that membership in the S&P 500 index should be added to the model as a third independent variable; the hypothesis is that there is greater demand for analyst coverage for stocks included in the S&P 500 because of the widespread use of the S&P 500 as a benchmark. a. write a multiple regression equation to test whether analyst following is systematically higher for companies included in the S&P 500 index. also include company size and debt-to-equity ratio in this equation. use the notations below. (analyst following)i = natural log of (1 + number of analysts following company i) Sizei = natural log of the market capitalization of company i in millions of dollars (d/e)i = debt-to-equity ratio for company i S&Pi = inclusion of company i in the S&P…arrow_forwardThe attached file contains hypothetical data for working this problem. Goodman Corporation’s and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown in the file. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. Construct a scatter diagram graph that shows Goodman’s and Landry’ returns on the vertical axis and the Market Index’s returns on the horizontal axis.arrow_forwardConsider the following data from a stock table on the company "Apple Inc." Name Apple Inc. Symbol APPL Close $148.96 Day Range $146.76−$148.98 52-week Range $89.47−$148.98 Volume 27,327,725 P/E 17.88 Dividend $2.52 EPS $? Calculate the earnings per share.arrow_forward
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- A poll uses responses to several questions to calculate a "Happiness" index that measures overall happiness. An article included the happiness index for the 7 years between 2008 and 2016. Also included in the article were the percentages of people who responded "somewhat agree" or "strongly agree" to the following statements. Statement 1 (happy with life) 1: At this time, I'm generally happy with my life. Statement 2 (won't benefit): I won't get much benefit from the things that I do anytime soon. Year 2008 2009 2010 2011 2013 2015 2016 Happiness Index 34 32 36 32 34 33 34 Happy with Life Statement (percentage somewhat or strongly agree) 80 79 80 79 81 80 86 Won't Benefit Statement (percentage somewhat or strongly agree) 33 41 33 39 41 37 38 (a) Calculate the value of the correlation coefficient for Happiness index and the response to the Happy with life statement. (Round your answer to four decimal places.) (b) Calculate the value of the correlation coefficient for Happiness index and…arrow_forward1. Use Bartman Industries and Reynolds Incorporated's stock prices and dividends, along with the Market Index, shown below for the period 1997-2002 to answer the following questions Data as given in the problem are shown below: Bartman Industries Year 2002 2001 2000 1999 1998 1997 Stock Price $17.250 14.750 16.500 10.750 11375 7.625 Dividend $1.150 1.060 1.000 0.950 0.900 0.850 Reynolds Incorporated Stock Price $48.750 52.300 48.750 57.250 60.000 55.750 Dividend $3.000 2.900 2.750 2.500 2.250 2.000 Market Index Includes Divs. 11,663.98 8,785.70 8,679.98 6,434.03 5,602.28 4,705.97 a. Use the data given to calculate annual returns for Batman. Reynolds, and the Market Index, and then calculate average returns over the 5-year period. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already…arrow_forwardDetermine whether an observational or experimental study is appropriate to address the following statement. A general manager of a restaurant wants to study if her customer base is shrinking.arrow_forward
- Table 10-2 A problem with a phone line that prevents a customer from receiving or making calls is upsetting to both the customer and the telecommunications company. The file “Phone” contains samples of 20 problems reported to two different offices of a telecommunications company and the time toclear these problems (in minutes) from the customers’ lines: Central Office I Time to Clear Problems (minutes) 1.48 1.75 0.78 2.85 0.52 1.60 4.15 3.97 1.48 3.10 1.02 0.53 0.93 1.60 0.80 1.05 6.32 3.93 5.45 0.97 Central Office II Time to Clear Problems (minutes) 7.55 3.75 0.10 1.10 0.60 0.52 3.30 2.10 0.58 4.02 3.75 0.65 1.92 0.60 1.53 4.23 0.08 1.48 1.65 0.72 Assuming that the population variances from both offices are not equal, is there evidence of a difference in the mean waiting time between two offices? (Use a = 0.01) ▪ You may need to download file “Phone”. Referring to Table 10-2, at the α = 0.05 level, the decision is Question 5 options: 1) Cannot…arrow_forwardTable 10-2 A problem with a phone line that prevents a customer from receiving or making calls is upsetting to both the customer and the telecommunications company. The file “Phone” contains samples of 20 problems reported to two different offices of a telecommunications company and the time toclear these problems (in minutes) from the customers’ lines: Central Office I Time to Clear Problems (minutes) 1.48 1.75 0.78 2.85 0.52 1.60 4.15 3.97 1.48 3.10 1.02 0.53 0.93 1.60 0.80 1.05 6.32 3.93 5.45 0.97 Central Office II Time to Clear Problems (minutes) 7.55 3.75 0.10 1.10 0.60 0.52 3.30 2.10 0.58 4.02 3.75 0.65 1.92 0.60 1.53 4.23 0.08 1.48 1.65 0.72 Assuming that the population variances from both offices are not equal, is there evidence of a difference in the mean waiting time between two offices? (Use a = 0.01) ▪ You may need to download file “Phone”. Referring to Table 10-2, the correct test statistic is Question 4 options: 1) 2.04, -2.04.…arrow_forwardTable 10-2 A problem with a phone line that prevents a customer from receiving or making calls is upsetting to both the customer and the telecommunications company. The file “Phone” contains samples of 20 problems reported to two different offices of a telecommunications company and the time toclear these problems (in minutes) from the customers’ lines: Central Office I Time to Clear Problems (minutes) 1.48 1.75 0.78 2.85 0.52 1.60 4.15 3.97 1.48 3.10 1.02 0.53 0.93 1.60 0.80 1.05 6.32 3.93 5.45 0.97 Central Office II Time to Clear Problems (minutes) 7.55 3.75 0.10 1.10 0.60 0.52 3.30 2.10 0.58 4.02 3.75 0.65 1.92 0.60 1.53 4.23 0.08 1.48 1.65 0.72 Assuming that the population variances from both offices are not equal, is there evidence of a difference in the mean waiting time between two offices? (Use a = 0.01) ▪ You may need to download file “Phone”. Referring to Table 10-2, at the α = 0.05 level, the correct critical value(s) is (are) Question 3 options:…arrow_forward
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