Scatter Plot

18

16

14

12

f(x) = - 0.2687137865x + 12.8829306822

R² = 0.0448645386
10
Y

0
6 7 8 9 10 11 12 13 14

X
X Y
9.5 13.8
7.2 15.5
11.2 10.6
8.2 11.4
6.4 10
9.5 11.1
7.4 9.6
8.3 10.2
9.4 11.7
8.9 10.8
10.7 12.8
9.8 9.1
8.5 12.5
8.7 8.7
8.9 8.2
11 4.6
10.5 7.7
13.6 8.5
10.2 10.8
11.2 8.7
10.3 11.5
12.8 11.2
7.4 8.8
10.2 11.2
7.9 9.2
Observation X Predicted Y Y Residuals
1 9.5 Err:509 13.8 Err:509
2 7.2 Err:509 15.5 Err:509
3 11.2 Err:509 10.6 Err:509
4 8.2 Err:509 11.4 Err:509
5 6.4 Err:509 10 Err:509
6 9.5 Err:509 11.1 Err:509
7 7.4 Err:509 9.6 Err:509
8 8.3 Err:509 10.2 Err:509
9 9.4 Err:509 11.7 Err:509
10 8.9 Err:509 10.8 Err:509
11 10.7 Err:509 12.8 Err:509
12 9.8 Err:509 9.1 Err:509
13 8.5 Err:509 12.5 Err:509
14 8.7 Err:509 8.7 Err:509
15 8.9 Err:509 8.2 Err:509
16 11 Err:509 4.6 Err:509
17 10.5 Err:509 7.7 Err:509
18 13.6 Err:509 8.5 Err:509
19 10.2 Err:509 10.8 Err:509
20 11.2 Err:509 8.7 Err:509
21 10.3 Err:509 11.5 Err:509
22 12.8 Err:509 11.2 Err:509
23 7.4 Err:509 8.8 Err:509
24 10.2 Err:509 11.2 Err:509
25 7.9 Err:509 9.2 Err:509
X Y
9.5 13.8
7.2 15.5
11.2 10.6
8.2 11.4
6.4 10
9.5 11.1
7.4 9.6
8.3 10.2
9.4 11.7
8.9 10.8
10.7 12.8
9.8 9.1
8.5 12.5
8.7 8.7
8.9 8.2
11 4.6
10.5 7.7
13.6 8.5
10.2 10.8
11.2 8.7
10.3 11.5
12.8 11.2
7.4 8.8
10.2 11.2
7.9 9.2
Simple Linear Regression Analysis

Regression Statistics
Multiple R 0.2118
R Square 0.0449
Adjusted R Square 0.0033
Standard Error 2.1885
Observations 25
 Calculations
b1, b0 Coefficients -0.2687 12.8829
b1, b0 Standard Error 0.2585 2.4967
R Square, Standard Error 0.0449 2.1885
F, Residual df 1.0804 23.0000
Regression SS, Residual SS 5.1742 110.1562

Confidence level 95%

t Critical Value 2.0687
Half Width b0 5.1649
Half Width b1 0.5348
ROE (%) Leverage Ratio (%)
13.8 9.5
15.5 7.2
10.6 11.2
11.4 8.2
10 6.4
11.1 9.5
9.6 7.4
10.2 8.3
11.7 9.4
10.8 8.9
12.8 10.7
9.1 9.8
12.5 8.5
8.7 8.7
8.2 8.9
4.6 11
7.7 10.5
8.5 13.6
10.8 10.2
8.7 11.2
11.5 10.3
11.2 12.8
8.8 7.4
11.2 10.2
9.2 7.9
F Test for Differences in Two Variances

Data
Level of Significance 0.05
Larger-Variance Sample
Sample Size 25
Sample Variance 4.805433333
Smaller-Variance Sample
Sample Size 25
Sample Variance 2.985766667

Intermediate Calculations
F Test Statistic 1.6094
Population 1 Sample Degrees of Freedom 24
Population 2 Sample Degrees of Freedom 24
Calculations Area
Two-Tail Test F.DIST.RT value 0.1254
Upper Critical Value 2.2693
p-Value 0.2508
Do not reject the null hypothesis
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.2118125082
R Square 0.0448645386
Adjusted R Square 0.0033369099
Standard Error 2.1884693362
Observations 25

ANOVA
df SS MS F Significance F
Regression 1 5.1742451877 5.1742451877 1.0803539713 0.3094223632
Residual 23 110.156154812 4.7893980353
Total 24 115.3304

Coefficients Standard Error t Stat P-value Lower 95%

Intercept 12.882930682 2.4967449244 5.1598906065 3.140238E-05 7.7180202931
X Variable 1 -0.268713787 0.2585275987 -1.039400775 0.3094223632 -0.8035188712
Upper 95% Lower 95.0% Upper 95.0%
18.04784107 7.7180202931 18.047841071
0.266091298 -0.803518871 0.2660912981
Observation ROE (%) Leverage Ratio (%)
1 13.8 9.5 Capital Structure Imp
2 15.5 7.2 part (a)
3 10.6 11.2 b_0 12.88293
4 11.4 8.2 b_1 -0.268714
5 10.0 6.4
6 11.1 9.5
7 9.6 7.4 part ©
8 10.2 8.3 X_test (%) 9.00
9 11.7 9.4 ROE_hat 10.46%
10 10.8 8.9
11 12.8 10.7 part (d)
12 9.1 9.8 r^2 0.0449
13 12.5 8.5
14 8.7 8.7 "About 4.5% of the variation in ROE
15 8.2 8.9 is explaied by the variation in the
16 4.6 11.0 LR"
17 7.7 10.5
18 8.5 13.6
19 10.8 10.2
20 8.7 11.2
21 11.5 10.3
22 11.2 12.8 part (f)
23 8.8 7.4 n 25
24 11.2 10.2 dof 23
25 9.2 7.9 r -0.2118
tSTAT (rho) -1.0394
significance 0.05
"a/2" 0.025
(+)tCRIT 2.0687
Fail to reject H0. There is not su
decision between the L

6.0
18.0

16.0
4.0
14.0

12.0 2.0

10.0

0.0
8.0 6.0 7.0

6.0
-2.0

4.0

-4.0
10.0

0.0
8.0 6.0 7.0

6.0
-2.0

4.0

-4.0
2.0

0.0
6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0
-6.0
 Y_hat residual residual
Capital Structure Impacts profitability to shareholders 10.3 3.5 -5.3
10.9 4.6 -2.4
9.9 0.7 -2.3
10.7 0.7 -2.1
11.2 -1.2 -1.8
10.3 0.8 -1.6
10.9 -1.3 -1.3
10.7 -0.5 -1.2
10.4 1.3 -1.2
10.5 0.3 -1.1
10.0 2.8 -0.7
10.2 -1.1 -0.5
10.6 1.9 0.3
10.5 -1.8 0.7
10.5 -2.3 0.7
9.9 -5.3 0.7
10.1 -2.4 0.8
9.2 -0.7 1.1
10.1 0.7 1.3
9.9 -1.2 1.4
10.1 1.4 1.8
9.4 1.8 1.9
10.9 -2.1 2.8
10.1 1.1 3.5
10.8 -1.6 4.6
110.15615
ave 0.0000
p-value 0.3094 stdev 2.1424

eject H0. There is not sufficient evidence of a (non-trivial) linear relationship

between the LR and ROE at the 95% confidence.

6.0

4.0

2.0

0.0
6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 -2.0000 -1.5000 -1.0000 -0.50

-2.0

-4.0
0.0
6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 -2.0000 -1.5000 -1.0000 -0.50

-2.0

-4.0

-6.0
 Observed Z-Score emp % theoretical Z X-X_bar Y-Yhat
-2.4865 0.0385 -1.7688 -0.01 3.47
-1.1022 0.0769 -1.4261 -2.31 4.55
-1.0695 0.1154 -1.1984 1.69 0.73
-0.9776 0.1538 -1.0201 -1.31 0.72
-0.8612 0.1923 -0.8694 -3.11 -1.16
-0.7282 0.2308 -0.7363 -0.01 0.77
-0.6042 0.2692 -0.6151 -2.11 -1.29
-0.5477 0.3077 -0.5024 -1.21 -0.45
-0.5429 0.3462 -0.3957 -0.11 1.34
-0.5366 0.3846 -0.2934 -0.61 0.31
-0.3400 0.4231 -0.1940 1.19 2.79
-0.2113 0.4615 -0.0966 0.29 -1.15
0.1441 0.5000 0.0000 -1.01 1.90
0.3071 0.5385 0.0966 -0.81 -1.85
0.3363 0.5769 0.1940 -0.61 -2.29
0.3392 0.6154 0.2934 1.49 -5.33
0.3593 0.6538 0.3957 0.99 -2.36
0.4938 0.6923 0.5024 4.09 -0.73
0.6269 0.7308 0.6151 0.69 0.66
0.6464 0.7692 0.7363 1.69 -1.17
0.8199 0.8077 0.8694 0.79 1.38
0.8874 0.8462 1.0201 3.29 1.76
1.3034 0.8846 1.1984 -2.11 -2.09
1.6196 0.9231 1.4261 0.69 1.06
2.1246 0.9615 1.7688 -1.61 -1.56
110.15615
10.464507

3.0000

2.0000

1.0000

0.0000
.0000 -1.5000 -1.0000 -0.5000 0.0000 0.5000 1.0000 1.5000 2.0000

-1.0000

-2.0000
 0.0000
.0000 -1.5000 -1.0000 -0.5000 0.0000 0.5000 1.0000 1.5000 2.0000

-1.0000

-2.0000

-3.0000
 part (g)
b1 -0.2687
SXX 71.6584 sumsq
SYX 2.19
S_b1 0.2585
tSTAT (b) -1.0394
significance 0.05
"a/2" 0.025
dof 23
"ta/2" 2.0687
Left -0.8035
Right 0.2661

part (h)
Population Response Int
n 25
dof 23
X_i (%) 9.00
Yhat_i $ 10.46
significance 0.05
"a/2" 0.025
tCRIT 2.0687
SXX 71.6584
SYX 2.19
hi 0.0436
E (%) 0.9453
Left (%) 9.5192
Right (%) 11.4098

Individual Response Int

E (%) 4.6248
Left (%) 5.8397
Right (%) 15.0893
 SUMMARY OUTPUT

Regression Statistics
Multiple R 0.2118125082
R Square 0.0448645386
Adjusted R Square 0.0033369099
Standard Error 2.1884693362
Observations 25

ANOVA
df SS MS F Significance F
Regression 1 5.1742451877 5.1742451877 1.0803539713 0.3094223632
Residual 23 110.156154812 4.7893980353
Total 24 115.3304

Coefficients Standard Error t Stat P-value Lower 95%

B0 Intercept 12.882930682 2.4967449244 5.1598906065 3.140238E-05 7.7180202931
B1 X Variable 1 -0.268713787 0.2585275987 -1.039400775 0.3094223632 -0.8035188712
Upper 95% Lower 95.0% Upper 95.0%
18.04784107 7.7180202931 18.047841071
0.266091298 -0.803518871 0.2660912981
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.211813
R Square 0.044865
18.0
Adjusted R 0.003337
Standard E2.188469
Observatio 25 16.0

ANOVA 14.0
df SS MS F Significance F
Regressio 1 5.174245 5.174245 1.080354 0.309422
12.0
Residual 23 110.1562 4.789398
Total 24 115.3304
10.0
Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%
Lower 95.0%
Upper 95.0%

Y
Intercept 12.88293 2.496745 5.159891 3.14E-05 7.71802 18.04784 7.71802 18.04784 8.0
X Variable -0.26871 0.258528 -1.0394 0.309422 -0.80352 0.266091 -0.80352 0.266091
6.0

RESIDUAL OUTPUT 4.0

Observation
Predicted YResiduals 2.0
1 10.33015 3.46985
2 10.94819 4.551809
3 9.873336 0.726664 0.0
4 10.67948 0.720522 6.0 7.0
5 11.16316 -1.16316
6 10.33015 0.76985
7 10.89445 -1.29445
8 10.65261 -0.45261
9 10.35702 1.342979
10 10.49138 0.308622
11 10.00769 2.792307
12 10.24954 -1.14954
13 10.59886 1.901137
14 10.54512 -1.84512
15 10.49138 -2.29138
16 9.927079 -5.32708
17 10.06144 -2.36144
18 9.228423 -0.72842
19 10.14205 0.65795
20 9.873336 -1.17334
21 10.11518 1.384821
22 9.443394 1.756606
23 10.89445 -2.09445
24 10.14205 1.05795
25 10.76009 -1.56009
 X Variable 1 Line Fit Plot
18.0

16.0

14.0

12.0

10.0
Y
Predicted Y
Y

8.0

6.0

4.0

2.0

0.0
6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0

X Variable 1
Y X B0 Intercept 12.882930682 When the leverage ratio is zero (which m
ROE (%) Leverage Ratio (%) B1 X Variable 1 -0.268713787 The better capitalized the bank is, the le
13.8 9.5 -2.4184240787
15.5 7.2 10.4645066036
10.6 11.2 goodness fit measure
11.4 8.2 variation in ROE data is not explained by
10.0 6.4 0.0448645386448324
11.1 9.5 The hypo test that the slope is not zero
9.6 7.4 There are 2 hyp tests that will give us th
10.2 8.3
11.7 9.4
10.8 8.9
12.8 10.7
9.1 9.8
12.5 8.5
8.7 8.7
8.2 8.9
4.6 11.0
7.7 10.5
8.5 13.6
10.8 10.2
8.7 11.2
11.5 10.3
11.2 12.8
8.8 7.4
11.2 10.2
9.2 7.9
leverage ratio is zero (which means the capital structure is all debt - no equity), then the return on equity is 12.9%
capitalized the bank is, the less profitable the bank is. For each 1% increase in leverage ratio, there is a decrease in the profitability to the s

n ROE data is not explained by the variation in the leverage data by the model
r squared value
est that the slope is not zero gives the same result that the correlation is not zero
2 hyp tests that will give us the same determination, that will have the same t stat.
ease in the profitability to the shareholders.