Estimate the following simple regression model: Return = 0 + 1 (P/E) + Using the

Question

Estimate the following simple regression model:
Return = 0 + 1 (P/E) +
Using the following information:

In the regression model in the previous question, what are the values for the coefficients 0 and 1, respectively?

Interpret the coefficient 1 and explain it
:

SUMMARY OUTPUT Regression Statistics Multiple R 0.62179805 R Square 0.386632815 Adjusted R Square 0.341198209 Standard Error 13.82060497 Observations 30 ANOVA df SS MS F Significance F Regression 2 3250.84338 1625.422 8.509655 0.001362 Residual 27 5157.246287 191.0091 Total 29 8408.089667 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -41.43007111 12.59216348 -3.29015 0.002789 -67.2671 -15.5931 -67.2671 -15.5931 P/E 3.77530837 0.978337805 3.858901 0.000642 1.767925 5.782692 1.767925 5.782692 Dividend Yield 1.664303788 1.766558559 0.942116 0.354487 -1.96037 5.288983 -1.96037 5.288983

Explanation / Answer

The value for coefficient for B0 is -41.43 and value for coefficient for B1 is 3.77530837.

Coefficient B1 means that the value of the dependent variable (return) would increase by 3.77530837 for every increase of 1 in B1 i.e. P/E.

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