A Regression Model: Was Developed to Predict a Firm's Price-Earnings Ratio (PE) Using

question 89

Multiple Choice

A regression model:

Was developed to predict a firm's Price-Earnings Ratio (PE) using Growth Rate, Profit Margin, and whether the firm is Green (1 = Yes, 0 = No) .Which of the following is the correct interpretation for the regression coefficient of Green?

• A)The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 higher than a firm that is not green with the same growth rate and profit margin.
• B)The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 lower than a firm that is not green with the same growth rate and profit margin.
• C)The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 times higher than a firm that is not green with the same growth rate and profit margin.
• D)The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 times lower than a firm that is not green with the same growth rate and profit margin.
• E)The regression coefficient is not significantly different from zero.