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Statistics

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Regression of Renata Pharmaceuticals Ltd.

Dependent and Independent variable data for regression are given below:

Year | Market Share Price | ROE | DPS | P/E | NP | 2000.0 | 431.5 | 11.34 | 30.0 | 5.34 | 37.56 | 2001.0 | 615.25 | 17.43 | 40.0 | 4.12 | 67.23 | 2002.0 | 650.0 | 16.25 | 50.0 | 4.16 | 72.56 | 2003.0 | 1261.0 | 22.57 | 70.0 | 5.55 | 105.56 | 2004.0 | 3200.0 | 25.0 | 70.0 | 12.27 | 145.59 | 2005.0 | 3000.0 | 26.0 | 70.0 | 10.43 | 192.57 | 2006.0 | 3099.25 | 24.65 | 70.0 | 23.14 | 242.13 | 2007.0 | 7491.25 | 26.29 | 70.0 | 40.31 | 358.02 | 2008.0 | 7789.25 | 26.06 | 75.0 | 32.5 | 438.67 | 2009.0 | 12051.5 | 27.34 | 85.0 | 36.09 | 594.48 |

Where market price is dependent variable and ROE, DPS, P/E, …show more content…

So the critical value is 5.41. The region where Ho is not rejected and the region where Ho is rejected are shown in the following diagram.
Region where Ho is not rejected
5.41
Region of rejection (0.05 level)

Continuing with the global test, the decision tool is not to reject the null hypothesis. The computed value of ‘f’ is less than or equal 5.41. If the computed value is more than 5.41 then we reject the Ho.

SSR/k | SSE/[m-(k+1)] |

The value of F is found from the following equation: F = = 47.16
The computed value of F is 47.16 which is in the rejection region. The null hypothesis that the multiple regression coefficients are 0 is therefore rejected. This means that sum of the independent variables have the ability to explain the variation in the dependent variable.
Evaluating individual regression coefficient:
Our next step is to test the independent variables individually to determine which regression coefficients may be 0 and which are not. If a ß could be equal to 0, it indicates that this particular independent variable is of no value in explain any variation in the dependent value. If there are coefficients for which Ho can’t be rejected. We may want to eliminate coefficient from regression equation.
We will now conduct four separate test of

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