# Exponential regression help and more

1. Jan 8, 2006

### Pepsi

Hi I'm doing some homework and I have the main question answered but this added one is hurting me.
Let me give you the entirity of it...
- For each company ABC and XYZ write an exponetial regression equation in the form of a X b^x (Thats A times B to the x), where x = number of yeats and why = EPS (Earnings per share).
So I came up with a expreg using the data provided and got my answers of ABC y= (.31)(1.28)^x
XYZ y= (.17)(1.17)^x
Now What do the values of a and b represent in this context? If someone could throw me a bone that would be great. I'm just not really familar with stocks/investments, like I did the math portion of this but the applying this to investments is tough for me.

Last edited: Jan 8, 2006
2. Jan 8, 2006

### HallsofIvy

y is measured in dollars and x is measured in years. What are the units for A and B?
What is y when x is 0? That should tell you what A represents. What is y when x is 1? Together with what you just learned about A, that should tell you what B represents.

3. Jan 8, 2006

### Pepsi

umm when x=0 y is .17, and when x=1 y is .1989 but I fail to see how that explains what A and B represents in context (stock markets and investments atleast I think)
These numbers pose no solution to me at all. Could you give me some more help?

Last edited: Jan 8, 2006
4. Jan 9, 2006

### HallsofIvy

If x= 0 or 1, what is y in terms of A and B?
What are the units on A and B? Also you haven't told us what data you got the equation from. That should give you a hint.

5. Jan 9, 2006

### EnumaElish

Did you mean "x = number of yeaRs and Y = EPS"? I will assume that's what you meant. Think how you'd plot this regression, with x on the horiz. axis and y on the vertical axis. Just make up a plot (it doesn't even have to be the relationship you estimated, something "close" should be okay). Now, how would you explain this plot to someone who has no idea about what you have done?