Mallari, Juliana S.

BSA2A

Module 6: Post-Task

A group of researches would like to determine the predictors of the stock price for a certain company.
They obtained the stock price, net profit margin, return on asset ratio, return on equity ratio, and price earning
s ratio for the past 10 years and the data is given below. Use α = 0.05.

Stock Price Net Profit Margin Return on Asset Ratio Return on Equity Ratio
55.00 5.56 10.50 18.21
88.90 6.02 10.28 19.15
90.45 5.20 9.08 17.36
102.00 5.22 8.89 17.08
173.10 5.88 10.26 20.22
215.00 6.10 10.10 19.70
219.00 5.00 7.80 16.10
194.00 5.00 8.00 18.00
253.00 5.00 7.00 17.00
291.80 5.00 7.00 17.00

1.    What is/are the significant predictor/s of stock price?

Answer: The Significant predictors of stock price

are Return on Asset Ratio and Price Earnings Ratio.

2.    Determine the equation of the Linear Regression using:

A. Significant predictors
Answer: Y = (-58.18RAR)+4.55PER+(-13.60)

B. Including the Non Significant Predictors

Answer: Y = (31.52NPM)+(-58.18RAR)+(20.66RER)+(4.55PER)+(-13.60)

3.    Explain the predicting capability of the predictors.

Answer: : there is a 95% that the stock price of the company could be prerdicted. Using the linear equation.
Regression Statistics
Multiple R 0.972954662766351
R Square 0.946640775798785
 Adjusted R Square 0.903953396437812
Standard Error 24.7626923296589
Observations 10

Predictors R Square Beta

Net Profit Margin 0.95% 31.5296838885221
Return on Asset Ratio -58.1829643427584
Return on Equity Ratio 20.669854498484
Price Earnings Ratio 4.5458641008662
Answer: Y = (31.52NPM)+(-58.18RAR)+20.66RER+4.55PER+13.60

4.    Using the linear regression line containing only the significant predictors, what will be the stock
Y = (-50.16RAR)+4.77PER+42.05
Stock Price Net Profit Margin Return on Asset Ratio
-269.16 4.85 6.5
-419.47 6.42 10.73

5.    Using the linear regression line containing all the possible predictors, what will be the stock pric
Y = (-8.86NPM)+(-50.16RAR)+25.29RER+4.77PER+42.05
Stock Price Net Profit Margin Return on Asset Ratio
178.81 4.85 6.5
216.75 6.42 10.73
o, and price earning

Price Earnings Ratio

21.07
28.51
28.82
28.52
38.90
47.40
42.40
33.76
38.45
38.08

Correlation

prerdicted. Using the linear equation.

Stock Price
Net Profit Margin
Return on Asset Ratio
 Return on Equity Ratio
Price Earnings Ratio

Constant P-Values Significance

-13.5988063635797 0.63889028518056 Not Significant Linear Regression
0.0267682607183257 Significant SUMMARY OUTPUT
0.195233419581082 Not Significant
0.0363568238945936 Signifficant Regression Statistics
Multiple R
R Square
predictors, what will be the stock price given the following: Adjusted R Square
Standard Error
Return on Equity Ratio Price Earnings Ratio Observations
15.6 20.97
21 48 ANOVA

ictors, what will be the stock price given the following: Regression
Residual
Return on Equity Ratio Price Earnings Ratio Total
15.6 20.97
21 48 Coefficients
Intercept
Net Profit Margin
Return on Asset Ratio
Return on Equity Ratio
Price Earnings Ratio

RESIDUAL OUTPUT

Observation
1
2
3
4
5
6
7
8
9
10
 n

Return on Return on Price

Stock Net Profit
Asset Equity Earnings
Price Margin
Ratio Ratio Ratio

1
-0.63 1.00
-0.72 0.67 1.00
 -0.23 0.51 0.77 1.00
0.81 -0.47 -0.32 0.09 1

ion Statistics
0.972955
0.946641
0.903953
24.76269
10

df SS MS F Significance F
4 54392.8 13598.2 22.17613 0.002214
5 3065.955 613.1909
9 57458.76

Coefficients
Standard Error t Stat
-13.59881 133.7941 -0.10164
31.52968 63.17327 0.499098
-58.18296 18.75179 -3.102796
20.66985 13.82897 1.494678
4.545864 1.602117 2.83741
P-value Lower 95%Upper 95%Lower 95.0% Upper 95.0%
0.922993 -357.5274 330.3298 -357.5274 330.3298
0.63889 -130.8624 193.9218 -130.8624 193.9218
0.026768 -106.386 -9.97996 -106.386 -9.97996
0.195233 -14.87864 56.21835 -14.87864 56.21835
0.036357 0.427491 8.664238 0.427491 8.664238
Not significant Predictors since the P-Value are Greater than 0.05 level of significan
Significant Predictors since the P-value is less than 0.05 Level of significance

Predicted SResiduals
22.96452 32.03548
103.5193 -14.61932
111.8947 -21.44471
116.4287 -14.42875
169.6171 3.482908
213.7544 1.245583
215.7518 3.248213
204.1117 -10.11165
262.9449 -9.944864
261.2629 30.53711
er than 0.05 level of significance
05 Level of significance