Statistics Prrce/eammgslP/E) ratios
l) Prrce/eammgslP/E) ratios – current stock price divided by earnings per share in the last 12 months – show
how much an Investor is willing to pay for a stock based on the stock’s earnings. P/E ratios are also used to
determme how optimistic the market is for a stock’s growth potential. Investors may be willing to pay more
for a lower earning stock than a higher earning stock if they see potential for growth. Data for a random
sample of 57 companies from Standard & Poor’s 500 index has been collected. This data is shown in the
worksheet named “Price Earnings ratios.”
a) Create a table showing the frequency distribution for this data. Use a class width of 4 and use the values
8 and 32 for your lowest and highest endpoints, respectively. After you have completed the frequencies,
construct adjacent columns showing the relative frequencies and percent frequencies in the same table.
(8 points)
b) Using the information from part a, construct a histogram to display the percent frequency distribution.
(Note: It may be easiest to copy the values needed into a separate table to create your graph.) Be sure
your histogram contains the following: (4 points)
Title
Labels for both axes
No gaps between the bars
2) Student exam scores for the midterm exam and the final exam are shown in the worksheet nanllefd1 “Exan;1
Scores.” Use Excel to create a scatter plot of this data. Place the scatter plot on’the sapiqwor s eet tit e
right of the data. Be sure to label your axes approprlately and create an appmpriaté going; your grap