What types of research questions can be addressed by logistic regression?
> After the September 11, 2001 terrorist attack, consumers showed a desire to tone down their consumer activities. At some point after a disaster, it is time to get back to business. Suppose you are approached by the owners of several delicatessens and ful
> Barton Boomer is a director of marketing research for a large research firm, and he has been asked to conduct research for a local restaurant chain, Eats-R-Wee. Mr. Big, VP-Operations for Eats-R-Wee, tells Barton that they are set to move across the bord
> Joe Brown, a 30-year veteran market researcher, is ready to enter the coffee shop business. He has some key research questions: • What markets in the United States hold the most promise for a new coffee shop? • What type of location is best for a coffee
> Describe the relationship between S and Σ with respect to SEM fit.
> Where do the DF originate for a SEM model?
> What do LISREL and SEM stand for? How does these terms relate to SEM in general?
> What is a moment in SEM terminology?
> What role does the matrix of standardized residuals produced by SEM play in assessing fit and drawing conclusions?
> What are composite factor scores?
> What does it mean for a variable to mediate the relationship between two other variables?
> What role does “distance” play in cluster analysis?
> How does one use a factor loading matrix (factor structure pattern) in interpreting factor analysis output?
> What is simple structure?
> Define K-means.
> If someone conducted one-way ANOVAs predicting the clustering variables using the cluster membership variable that was obtained from a cluster analysis procedure, what should the expectation of the results of those ANOVAs be?
> What is the entropy or pseudo R2?
> Explain what the likelihood value is used for in interpreting logistic regression results.
> How is cluster analysis different from factor analysis?
> What is a slopes test?
> What is a confusion matrix?
> Define dependence techniques and give examples of multivariate dependence techniques.
> What is a factor loading?
> What is MANOVA? What distinguishes MANCOVA from MANOVA?
> Explain the role of Wilks Lambda in MANOVA and MANCOVA.
> Explain the concept of a variate in multivariate data analysis.
> Think about variables that cause one student to perform better in a business class than another student. Propose a hypothesis that captures that relationship. Now, think of a third variable that might mediate that relationship. Propose a hypothesis for t
> What is the key characteristic identifying multivariate data analysis?
> What evidence would a researcher use to prove a negative relationship existed between X and Y?
> A researcher proposes the following hypothesis: Brand image is positively related to willingness to pay. After running a regression analysis with data on these variables, how would one know if the researcher’s hypothesis is supported?
> What does it mean for a hypotheses to be tautological?
> Major hurricanes in the Gulf of Mexico in 2005 damaged oil rigs and refineries, contributing to a spike in oil prices. Some felt those events were the long-expected trigger that would kill off demand for SUVs and other gas-guzzling vehicles, but they wer
> Describe the distinction between dependence and interdependence multivariate techniques. Provide examples of each.
> What are the characteristics of good (well-stated) hypotheses?
> Describe how CFA results helps provide evidence of construct validity.
> What is the difference between a fixed and free parameter?
> Why does the fact that SEM is a covariance technique reinforce its role as an explanatory tool?
> What is PLS and what are its key strengths and weaknesses?
> Define the terms exogenous construct and endogenous construct. How does one turn an exogenous construct into an endogenous construct in AMOS?
> Explain why SEM, originally conceptualized in the 1920s, took so long to catch on as a widely applied multivariate data analysis tool.
> What is PCA?
> Explain the concept of communality in factor analysis. How is it related to the concept of factor loadings?
> Define the term latent construct. How does factor analysis play a role in understanding latent constructs?
> What is the difference between a dimension and a segment? Describe examples of each.
> How does factor analysis help marketing research obtain greater parsimony?
> Why has cluster analysis become a more prominent tool in the big data era?
> What role does rotation play in factor analysis? What does it mean for a rotation to maintain a 90-degree angle?
> How does an analyst interpret the statistical significance and meaning of individual independent variables used in logistic regression?
> How is a cutting score used to determine group membership in discriminant analysis?
> How are MANOVA and discriminant analysis related?
> What is the primary difference in applications between discriminant analysis and logistic regression analysis?
> What is hierarchical regression analysis? How does it differ in approach from standard multiple regression?
> Define a moderation effect. Give a typical example. How do they account for context?
> Why is multivariate data analysis particularly useful in big data analysis?
> LMN Corporation, a real estate company, is planning to pay a dividend of $0.50 per share. Most of the investors in LMN are other corporations that pay 40% of their ordinary income and 28% of their capital gains as taxes. However, they are allowed to exem
> Southern Rail has just declared a dividend of $1. The average investor in Southern Rail faces an ordinary tax rate of 50%. Although the capital gains rate is also 50%, it is believed that the investor gets the advantage of deferring this tax until future
> Lube Oil, a chain of automobile service stations, reports net income of $100 million after depreciation of $50 million. The firm has capital expenditures of $80 mil- lion, and the noncash working capital increased from $25 to $40 million. Estimate the fi
> Assume in the previous question with Vernon Enterprises that the firm will earn a return on capital of 15% in perpetuity. a. Assume that the firm is in stable growth, growing 5% a year forever; estimate the firm’s reinvestment rate. b. Given th
> If Consolidated Power is priced at $50.00 with dividend, and its price falls to $46.50 when a dividend of $5.00 is paid, what is the implied marginal rate of personal taxes for its stockholders? Assume that the tax on capital gains is 40% of the person
> Assume you have all your wealth (a million dollars) invested in the Vanguard 500 index fund, and that you expect to earn an annual return of 12%, with a standard deviation in returns of 25%. Since you have become more risk averse, you decide to shift $
> Cello is a manufacturer of pianos. It earned an after-tax return on capital of 10% last year and expects to maintain this return next year. If the current year’s after-tax operating income is $100 million and the firm reinvests 50% of this income
> In the illustration in Problem 25, what would the tax rate on equity income need to be for debt to not have an effect on value?
> The following regression was run using all NYSE firms in 1995 YIELD = 0.0478 − 0.0157 BETA + 0.0000008 MKTCAP + 0.006797 DBTRATIO + 0.0002 ROE − 0.09 NCEX∕TA R 2 = 12.88% Where BETA = beta of the stock, MKTCAP = market value of equity
> You are the owner of a small hardware store, and you are considering opening a gardening store in a vacant area in the back of your present store. You estimate that it will cost you $50,000 to set up the new store and that you will generate $10,000 in
> You are stockholder in a SmallTech, a company that is planning to raise new equity. The stock is trading at $15 per share, and there are 1 million shares outstanding. The firm issues 500,000 rights to buy additional shares at $10 per share to its exist
> You are using the multifactor model to estimate the expected return on Emerson Electric and have derived the following estimates for the factor betas and risk premia: With a riskless rate of 6%, estimate the expected return on Emerson Electric. &
> National City, a bank holding company, reported earnings per share of $2.40 and paid dividends per share of $1.06. The earnings had grown 7.5% a year over the prior five years, and were expected to grow 6% a year in the long run. The stock had a beta o
> United Airlines has a beta of 1.50. The standard deviation in the market portfolio is 22% and United Airlines has a standard deviation of 66%. a. Estimate the correlation between United Airlines and the market portfolio. b. What proportion of United
> You are the manager of a pharmaceutical company and are considering what type of laptop computers to buy for your salespeople to take with them on their calls. • You can buy fairly inexpensive (and less powerful) older machines for about $2,000 each. Th
> You have been asked to analyze the standard deviation of a portfolio composed of the following three assets: You have also been provided with the correlations across these three investments: Estimate the variance of a portfolio, equally weigh
> Sunshine Media has just completed an IPO, where 50 million shares of the 125 million shares outstanding were issued to the public at an offering price of $22 per share. On the offering date, the stock price zoomed to $40 per share. Who gains from this
> You are a small business owner considering two alternatives for your phone system. The discount rate is 8%. Which alternative would you pick?
> The following is a regression of dividend payout ratios on the risk and ln(market capitalization: in millions) of chemical firms: Dividend Payout Ratio = 0.14 + 0.05 [ln(Market Capitalization in Millions)] − 0.1(Beta) Harman Chemicals has a mar
> You have been asked to estimate a Markowitz portfolio across a universe of 1,250 assets. a. How many expected returns and variances would you need to compute? b. How many covariances would you need to compute to obtain Markowitz portfolios?
> Novell, which had a market value of equity of $2 billion and a beta of 1.50, announced that it was acquiring Word- Perfect, which had a market value of equity of $1 billion and a beta of 1.30. Neither firm had any debt in its financial structure at the t
> Tech Products reported a net loss of $80 million for the latest financial year. In addition, the firm reported a net capital expenditure of $70 million and a change in non- cash working capital of $10 million. Finally, the firm had $10 million in debt at
> Zycor Corporation obtains most of its funding internally. Assume that the stock has a beta of 1.2, the riskless rate is 6.5%, and the market risk premium is 6%. a. Estimate the cost of internal equity. b. Now assume that the cost of issuing new stock is
> Safecorp, which owns and operates grocery stores across the United States, currently has $50 million in debt and $100 million in equity outstanding. Its stock has a beta of 1.2. It is planning a leveraged buyout, where it will increase its debt-to-equity
> You have just been approached by a magazine with an offer for renewing your subscription. You can renew for one year at $20, two years for $36, or three years at $45. Assuming that you have an opportunity cost of 20% and the cost of a subscription will n
> You are trying to choose a new siding for your house. A salesman offers you two choices: a. Wood siding, which will last 10 years and cost $5,000to install and $1,000/year to maintain. b. Aluminum siding, which will last forever, cost $15,000 to install,
> The following table lists returns on the market portfolio and on Microsoft, each year from 1989 to 1998. a. Estimate the covariance in returns between Microsoft and the market portfolio. b. Estimate the variances in returns on both investments. c. Estima
> Upjohn, also a major pharmaceutical company, is considering increasing its debt ratio from 11% to 40%, which is its optimal debt ratio. Its beta is 1.17, and the current Treasury bond rate is 6.50%. The return on equity was 14.5% in the most recent year,
> You have been asked to analyze the capital structure of DASA, an environmental waste disposal firm, and make recommendations on a future course of action. DASA has 40 million shares outstanding, selling at $20 per share, and a debt/equity ratio (in marke
> The unlevered beta of electronics firms, on average, is 1.1. The riskless rate is 6.5%, and the market risk premium is 6%. a. Estimate the expected return, using the CAPM. b. If you are a venture capitalist, why might you have a target rate of return muc
> You have been asked to compare three alternative investments and make a recommendation. • Project A has an initial investment of $5 million and after-tax cash flows of $2.5 million a year for the next five years. • Project B has no initial investment, af
> You are analyzing two mutually exclusive projects with the following cash flows: a. Estimate the NPV of each project, assuming a cost of capital of 10%. Which is the better project? b. Estimate the IRR for each project. Which is the better project? c. Wh
> Every investor in the capital asset pricing model owns a combination of the market portfolio and a riskless asset. Assume that the standard deviation of the market portfolio is 30% and that the expected return on the portfolio is 15%. What proportion of
> In Germany, large banks are often large lenders and large equity investors in the same firm. For instance, Deutsche Bank is the largest stockholder in Daimler Chrysler, as well as its largest lender. What are some of the potential conflicts that you see
> A prominent beta estimation service reports the beta of Comcast Corporation, a major cable TV operator, to be 1.45. The service claims to use weekly returns on the stock over the prior five years and the NYSE composite as the market index to estimate bet
> In the face of disappointing earnings results and increasingly assertive institutional stockholders, Eastman Kodak was considering the sale of its health division, which earned $560 million in EBIT in the most recent year on revenues of $5.285 billion. T
> RJR Nabisco, in response to stockholder pressure in 1996, announced a significant increase in dividends paid to stockholders financed by the sale of some of its assets. What would you expect the stock price to do? Why?
> Stock buybacks really do not return cash to stockholders because only those who sell back stock receive the cash. Is this statement true or false? Explain.
> Pfizer, a major pharmaceutical company, has a debt ratio of 10.30% and is considering increasing its debt ratio to 30%. Its cost of capital is expected to drop from 14.51% to 13.45%. Pfizer had an EBIT of $2 billion in 1995 and a book value of capital (d
> Terck, a leading pharmaceutical company, currently has a balance sheet that is as follows: The firm’s income statement looks as follows: The firm’s bonds are all 20-year bonds with a coupon rate of 10% that are selling
> You are a venture capitalist and have been approached by Cirrus Electronics, a private firm. The firm has no debt outstanding and does not have earnings now but is expected to be earning $15 million in four years, when you also expect it to go public. Th
> Estimate the MIRR for the project described in Problem 8. Does it change your decision on accepting this project?
> Reader’s Digest has voting and nonvoting shares. About 70% of the voting shares are held by charitable institutions, which are headed by the CEO of Reader’s Digest. Assume that you are a large holder of the nonvoting shares. Would you be concerned about
> New Age Telecomm is a young, high-growth telecommunications firm. It pays no dividends, although the average dividend payout for other firms in the telecommunications sector is 40%. Is New Age paying too little in dividends? Why or why not?
> Lockheed, one of the largest defense contractors in the United States, reported EBITDA of $1,290 million in a recent financial year, prior to interest expenses of $215 million and depreciation charges of $400 million. Capital expenditures amounted to $45
> WeeMart, a retailer of children’s clothes, announces a cut in dividends following a year in which both revenues and earnings dropped significantly. How would you expect its stock price to react? Explain.
> Assuming that you do the analysis in Problem 8 with both firm value and operating income, what are the reasons for the differences you might find in the results, using each? When would you use one over the other.
