Question – 20210626W

I need the fourth question of this project (The bold one) The Primary goal of the project is for students to gain comfort in using statistical software packages to conduct an empirical analysis of a particular firm. Specific goals are for students to (1) become familiar with sources of economic and financial information and in particular the Wharton Research Data Services (WRDS) Database, (2) practice their writing skills, (3) develop hands on, statistical estimation and modeling skills using excel (e.g., data analysis, regression analysis). The project is an individual assignment and late submissions will not be accepted. Please provide explanations for answers to all questions. Background material: Chapter 4, 5 in McGuigan, Moyer and HarrisPLEASE FIRST SELECT PUBLIC COMPANY TO ANALYZE. USING YOUR WEB BROWSER, ANSWER ALL OF THE QUESTIONS THAT FOLLOW FOR THAT PARTICULAR COMPANY. THE CHOICE OF COMPANY IS UP TO YOU. BUT, PLEASE EMAIL ME TO LET ME KNOW OF YOUR SELECTION AND MAKE SURE THAT YOU HAVE ENOUGH DATA TO ANSWER ALL OF THE QUESTIONS. COMPANY SELECTION IS FIRST COME FIRST SERVE. IT IS A GOOD IDEA TO KEEP THREE OR FOUR COMPANIES IN MIND BECAUSE YOU ARE TO FIND A COMPANY THAT HAS ENOUGH PUBLICALLY AVAILABLE DATA TO ANSWER EACH QUESTION. THERE IS NO NEED TO INCLUDE DATA OR SPECIFIC PROGRAMS USED TO ANSWER QUESTIONS, BUT, IN ALL YOUR RESPONSES, PLEASE INCLUDE EXPLANATIONS OF STEPS CARRIED OUT. IT IS OKAY TO WORK WITH OTHER PEOPLE, BUT YOUR EXPLANATIONS SHOULD BE IN YOUR OWN WORDS. 1. Data collection from WRDS database Using your web browser, please go to the WRDS URL (http://wrds.wharton.upenn.edu) and collect data on the variables for the risk free rate, small minus big, high minus low, and the excess market return for the firm your selected. When you collect the data, please select the monthly frequency and the range spanning from 1980 through 2017. Using your class notes and the descriptions provided by WRDS, please provide a brief description of each variable included in the study. Please save these variables in an excel spreadsheet. Please download and save stock prices for your firm spanning the same period and at the monthly frequency. Please compute stock price returns as the ratio of the change in the stock price for each period with respect to the previous period to the value in the previous period This will serve as the base case from which we will complete the rest of the project. 2. Regression Analysis For this question, you will need the data analysis tool pack in excel, please download it to your version of excel for your operating system before answering the questions listed below. a. Please, separately, determine the estimated regression line for a regression with the stock return as the dependent variable and the following list as independent variables:a. Excess market return b. Small minus big c. High minus lowb. Please determine the estimated regression line with the stock return as the dependent variable and the risk free rate, excess market return, small minus big, and high minus low as the independent variables in one single regression model. c. Which regression coefficients are statistically significant? Is the overall model significant?d. What is the adjusted R-squared for the model? How does it compare to the adjusted R-squared for each model estimated in a? Is your answer to part b different from your answers to part a? Why or Why not? 3. Forecastinga. Using only data covering the period 1980 through 2000, please determine the estimated regression line with the stock return as the dependent variable and the risk free rate, excess market return, small minus big, and high minus low as the independent variables in one single regression model. b. Please use the model to predict stock price return from 2001 to 2017 and compute the root mean squared error using the deviation between the actual stock price return over this period and the model-predicted stock price return over the same period. 4. DiscussionUsing your web browser and your own judgement and your class notes, please interpret and discuss the strength of the relationship between stock price returns for your firm and each of the three variables. In particular, please consider whether or not you think that the three variables do a good job in explaining and predicting stock returns for your firm. Please also explain why you think the model produced all results from questions 2 and 3 that it did. my professor sent this instructions to explain the discussion how to start it and what did he want to” To begin, we discuss question #4. There are three aspects of question 4; statistics, economics and managerial. First, for statistics, please take a look at what you found in questions 2 and 3 to be statistically significant and important in explaining the return for your firm (the key statistical information here is the adjusted R-squared, p-value, model f-value all of which you summarized in your response to 2c and 2d). Then, and using the economic interpretations for these variables only (please note: the economic interpretations are provided below), please perform an Internet-based research using your web browser to provide an explanation regarding why these explanatory variables were able to explain the return for your firm. This is the managerial aspect. The economics aspect depends upon the economic interpretations which are: EXMRKT is related to the S&P 500 or a similar large scale stock market index and so it correlates with a diversified group of companies and so its tied to the performance of many firms and thus the well being of many people and it correlates to generally to income of country or business cycles (at up point in a business cycle, market does better economy does better and this tends to be correlated to people having higher income). So, we want to assess how realty income performs in different states (or business cycles) of the overall economy. The SMB factor is measured using the market capitalization and represents return to portfolios formed on size measured as market cap, this is what SMB means small minus big. So, if the portfolios are formed by placing companies into buckets or groups defined by deciles (i.e., bottom 10percent, next bottom 10 percent, bottom 30 percent, etc.) then the return on the smallest 10 percent or bottom decile minus the return on the biggest 10 percent or top decile computed at each date point is the SMB factor. Thus, a reduction in this value would be a consequence of the return on the bigger firms being greater than the return on the smaller firms. A bigger firm would then see a negative sign since it would say higher SMB (implying higher return on small firms relative to big firms) would lead to lower (relatively) return for the bigger firm and vice versa for a small firm. This is measuring size using market capitalization of your company, realty income, to see where it fits in this horizon. HML is constructed in a similar manner except in regards to book to market ratio and so as we mentioned very early in semester (maybe week 2 or 3), we are looking at High book to market ratio is meaning the old or historical (accounting or book) value being large relative to current (today’s) value and so here we say this is sign of low growth in the firm, but a low book to market means the old or historical value is low relative to today’s value and so the firm is assumed to have grown more. So, HML is related to growth opportunities for realty income. The second purpose of this email is to let you know what to include in your final writeup. For question #1, please include the steps you used to collect all the data on the three fama french factors along with the definitions of these three variables and also your stock price data as well as how you converted the stock price to the stock price return. These steps have been sent in an email through the Canvas site and the definitions are provided on the WRDS site itself. For question #2 (part a, b, and c), please include the summary output charts and the estimated line fit plots produced by excel when you carried out the regressions. For question #2 (part b), please include the summary output chart and the corresponding fitted equation. Please include the same things in your response to question #3a. Please also remember to include all the details regarding how you carried out your regressions and any calculations that you made (including for instance in question 3b). Finally, I prefer that you copy and paste all of these into your Microsoft word document. The final writeup typically is on the order of 6-8 pages and for most people it turns out to be about 8 pages. I do prefer quality over quantity and give you this page range in order to help you to manage all the documents and what needs to be turned in” Requirements: 6-8 pages | _____________________Order any type of Service We Provide We are the best assignment service that can satisfy student’s demands in different scientific fields. We perform tasks of any kind. Our specialists provide diverse custom assignment writing services to students from all over the world every day. You can contact us for assistance with: • Essays of any type (application, scholarship, argumentative, personal, informative, persuasive, compare and contrast, narrative, analytical, cause and effect, critical, process, descriptive, expository essays); • Homework, • Assignments, • Reviews of all types (for a book, an article, or a film), • Reports, • Annotated bibliography, • Projects, • Thesis, • Term papers, • Presentations, • Lab works, • Research papers, • Speeches, • Critical thinking, • Capstone projects; • plan; • Coursework’s; • Dissertations. The list is far from complete! Representatives of our student assignment service are connoisseurs of the peculiarities of presentation in regards to academics.