Questions for Exercise 1:

You need to estimate relationship between

a) Beta = f(P/E)

b) Market model --> Stock return = f(Market return)

Answer following questions for each model mentioned above

1. Provide descriptive statistics of all variables and interpret

2. Provide graph of all variables and interpret

3. Estimate Model (a) and Model (b) and provide results in suitable format

4. Interpret the results in each model for statistical significance for each variable

5. Interpret results in each model for overall significance of model