Price to Earnings Ratios One measure of the value of a stock is its price to earnings ratio (or P/E ratio): the ratio of the price of a stock per share to the earnings per share and can be thought of as the price an investor is willing to pay for $1 of earnings in a company. A stock analyst wants to know whether the P/E ratios for three industry categories differ significantly. The following data represent simple random samples of companies from three categories: (1) financial, (2) food, and (3) leisure goods.

(a) Test the null hypothesis that the mean P/E ratio for each category is the same at the level of significance. Note: The requirements for a one-way ANOVA are satisfied.

(b) If the null hypothesis is rejected in part (a), use Tukey’s test to determine which pairwise means differ using a familywise error rate of

(c) Draw boxplots of the three categories to support the analytic results obtained in parts (a) and (b).

Compatibility with the 3G network, Wi-Fi and a touch screen are other recent features of mobile phones. The previous table also contains data on 3G compatibility and whether the phone has Wi-Fi and touch screen (a ‘1’ indicates the phone has 3G compatibility, Wi-Fi, and touch screen, respectively and a ‘0’ that is does not). Develop another multiple regression model using the four explanatory variables (battery standby time, music player score, camera resolution, and weight) and the three dummy variables 3G, Wi-Fi, and touch screen. Summarize the strength of your model (including the dummy variables) and any new variables generated by recoding. What advice would you give to mobile phone manufacturers with regard to the development, release and marketing of new mobile phones?