Perform an analysis by randomly selecting 30 stocks (already done as per attached file) listed in… 1 answer below »

Perform an analysis by randomly selecting 30 stocks(already done as per attached file)listed in a country over the period of 2000 – 2016. The quarterly variables of the stocks include

MARKETCAP (Market Capitalization) = price per share x the number of shares outstanding

DEBT = the amount of long-term debt held by the firm

SALES = total sales of the firm

INCOME = net income of the firm

ASSETS = book value of the assets of the firm

Based on the randomly selected 30 stocks (file attached):

1. Describe the data with appropriate descriptive statistics (using both graphical and numerical descriptive statistics).

2. Do firms with large sales tend to be worth more (as measured by market capitalization) than those with small sales.

3. How are these variables (MARKETCAP, DEBT, …, and ASSETS, etc.) correlated with each other?

4. Estimate the mean value of each variable with 95% confidence.

5. Split your sample into prior- and post- Global Financial Crisis (GFC) subsample periods. Test if the mean value of each variable has changed after the GFC.

6. Perform a regression analysis with market capitalization as the dependent variable and DEBT, SALES, INCOME, and ASSETS as independent variables over the entire sample period.

a. Report the estimated coefficients of the independent variables.

b. How well does the regression model work for market capitalization?

c. Which variables exhibit explanatory power for market capitalization?

d. Identify two additional firm-specific variables or market-wide variables that may help explain the market capitalization. What happens to your results in a., b., and c. after these two variables are incorporated in the regression?

e. Write a 500-word literature review section to discuss how your results in d. are related to the existent literature.

f. Does the explanatory power of the independent variables for market capitalization change post the GFC?


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