The Regression Model Developed to Predict a Firm's Price-Earnings Ratio $$\mathrm { PE } = 8.04 + 0.757 \text { Growth Rate } + 0.0516 \text { Profit Margin } + 2.09 \text { Green? }$$

Multiple Choice

The regression model developed to predict a firm's Price-Earnings Ratio (PE)
Based on Growth Rate, Profit Margin, and whether or not the firm is Green (1 = Yes, 0 =
no. is $$\mathrm { PE } = 8.04 + 0.757 \text { Growth Rate } + 0.0516 \text { Profit Margin } + 2.09 \text { Green? }$$
Which of the following is the correct interpretation for the regression coefficient of
Green?

A) The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 higher than a firm that is not green with the same growth rate
And profit margin.
B) The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 lower than a firm that is not green with the same growth rate
And profit margin.
C) The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 times higher than a firm that is not green with the same
Growth rate and profit margin.
D) The regression coefficient indicates that the PE ratio of a firm that is green will, on average, be 2.09 times lower than a firm that is not green with the same
Growth rate and profit margin.
E) The regression coefficient is not significantly different from zero.