(a) _______ % of the variance is explained by this regression.
(b) The firm-specific risk is ______.
(c) The beta of this stock is ______. Hence, the stock is ______% riskier than the market.
(d) The characteristic line for this stock is E(Rstock) = ___ + ___ E(Rmarket)
(e) The alpha(intercept) has a t-Stat = ______. This is ______ than 2. Therefore, we can treat this alpha as if it’s equal/not equal to (circle one) zero and conclude the CAPM is valid/invalid (circle one) for this stock.
(a) _______ % of the variance is explained by this regression. (b) The firm-specific risk is ______. (c) The beta of thi...
B. MICFUELUNUML U C. idiosyncratic risk CD. systematic risk 0.5. Which of thes A. II,IV B. II,IV.v C. 1,111,1V ck A and Z have a correlation 05 D. 1,111, E. I, 3 Stock A and Stock B have a correlation Correlation-0.7, Stock A and Z have than a portfolio of story are an in is part of market A. Stock A and Z have a stronge CB. A portfolio of stock A and B P C C. Stock A and...
Question 1: Cooley Company's stock has a beta (b) of 1.28, the risk-free rate (rRF) is 1.25%, and the market risk premium (RPM) is 5.50%. a. What does the beta measure? Give a short answer in 1 sentence. b. What is market risk premium? Give a short answer in 1 sentence. c. Calculate the firm's required rate of return? Show the step-by-step calculation and circle your answer. (Hint: Required return = rRF + b(RPM)) Question 2: Consider the following information...
(1 point) The Capital Asset Price Model (CAPM) is a financial model that attempts to predict the rate of return on a financial instrument such as a common stock, in such a way that it is linearly related to the rate of return on the overal market. Specifically, RStockAd Bo+ PRMarket + e You are to study the relationship between the two variables and estimate the above model: 1,2,, 59 RStock Ad-rate of return on Stock A for month i,...